|
Application Outsourcing: Reduce Costs and Minimize Risk |
|
|
|
Wednesday, 08 April 2009 |
|
Page 5 of 6
Case Study 3: Engineering Uses App Outsourcing to Supplement Internal Staff
The CIO of this engineering company uses application outsourcing to deal with needs that arise sporadically in his organization. He cannot afford to hire additional internal staff, and is pleased that application outsourcing allows him to scale external staff up or down as required without impacting internal employees.
|
Table 5. App Outsourcing Supplements Internal Staff
Source: Info-Tech Research Group
|
|
Industry
|
Engineering Services
|
Total Employees
|
5,000
|
|
Type of Organization
|
Private
|
IT Employees
|
111
|
|
IT Complexity
|
Moderate
|
App/Dev Employees
|
55
|
|
Technology Adoption
|
Mainstream
|
Revenue
|
$1B-$5B
|
|
% of App Budget Outsourced
|
10-15%
|
Revenue Growth
|
15%+
|
|
Type of App Outsourced
|
Configuration of a learning management application and major upgrades to ERP application.
|
|
Trigger for Outsourcing
|
Staffing constraints and a desire for staffing flexibility.
The ability to reduce costs was a factor but not the main driver.
|
|
How Outsourcing Reduced Financial Risk
|
This organization manufactures capital goods equipment, which is often made to order. The engineering group spends a lot of time customizing machines for particular client needs.
When application development needs arise, there is the risk of these needs being pushed aside as employees work to get a machine out the door. Focusing on application development instead of devoting time to client customizations would greatly increase the time-to-market of the machines.
The CIO has needs that arise sporadically, and he cannot afford to hire permanent staff with the necessary expertise. Outsourcing gives him the ability to scale staff up and down as needed.
He also uses application outsourcing to avoid laying off his own people during slow periods.
He noted that his organization will most likely reduce their application outsourcing in the near future in anticipation of possible economic troubles.
He is pleased that during uncertain times, he can cut back on outsourcing as a risk mitigation strategy as opposed to laying off his permanent staff members.
He also enjoys the fact that outsourcing is always available to him during emergencies and spikes in demand, regardless of the economic climate.
|
|
