IT Outsourcing Disasters: Lessons learned from real life experiences
Recently we invited various IT consulting and cloud computing specialists to share their expertise on “how to spot a cloud computing charlatan.”
Unfortunately, this concept arose from real-life clients with “horror stories” on their IT outsourcing disasters.
This article is the first in a series of clients who share their IT outsourcing experiences and how to proceed moving forward. Today’s guest is Izzy Goodman of CCS Digital, a PC sales and consulting firm.
I spent the last ten years working for a major television company. They brought in a new VP in the IT Department who outsourced every major project. Employees were not trained in the technology used and were expected to "learn it off the internet." The offshore developers never spoke directly to the users and received their instructions from old, incomplete documentation.
When the first iteration failed, the offshore firms were fired and new firms hired. Ten years later, every project was over budget, behind schedule and didn't work. The VP's solution was to fire half the in-house IT department. Several months later, he was fired.
Outsourcing can be effective if used wisely, but using it to develop major applications without input from the in-house team, training for the in-house team, proper analysis and design will result in a disaster.
According to some statistics, 60% of offshore IT projects fail and even of those which succeed, the savings is only about 15%. That's like paying $85,000 for lottery tickets in the hope of winning $100,000. The possible reward doesn't justify the risk.
In the meantime, unemployment is rising, the economy is tanking, and the companies "saving" money by outsourcing are finding that there are fewer Americans who can afford their products.
To prevent disasters, use outsourcing wisely. When developing custom applications, make sure the in-house team is involved every step of the way and understands the technology. They will have to support it. It's fine to outsource specific functions or testing but to hand off an entire application is a disaster. Would you hire a contractor for a major renovation job and then not inspect it or be involved until after it was finished? Unfortunately, that's what my company did.
When I develop a site for a client, I insist they stay involved. I learned the hard way years ago that's it not a good idea to do too much work without their input. Sometimes I even contact the client and tell them work is stopping until they review it and get back to me.
Have you experienced an unsatisfactory IT outsourcing relationship? Share your story below, or get a free guide on choosing the right IT provider for your organization.