How IT companies must act in financial crisis

TEAM International – TEAM International shares expert opinions of how IT offshore outsourcing services providers should act within the current world’s financial crisis to suffer as little as possible.

In today’s business world specialists use such words as “tsunami” and “collapse” to describe the current financial crisis. Taxpayers and governments around the world have agreed to help the most injured firms offload their loans and resolve their liquidity concerns. The multi-billion dollar offshoring industry is keeping its fingers crossed and is hoping to withstand the crisis by attracting more companies realizing that offshore outsourcing is one of the major ways to cut costs.

Some outsourcing gurus claim that the financial crisis would be able to ultimately revive their business in spite of the fact it would have some very negative effects on it in the short term. As noted in the recent publication by The Economist, “banking survivors that already use outside contractors will give them more to do as they cut costs” and will have to embrace outsourcing to protect their margins.

According to Gartner, the world’s leading outsourcing consultancy agency, today’s “IT leaders must find the courage to look beyond the immediate threat towards the future.” Whit Andrews, Gartner’s distinguished analyst, believes that what is currently being faced by the global economies is, in fact, the end of the financial era. It is the time when conspicuous consumption is over and conspicuous thrift starts. As the world’s economy changes, the role of each IT leader must change accordingly to shape the major wants and needs of the upcoming age.

Gartner makes three key recommendations for IT offshore outsourcing services providers to survive the crisis and enter the new era well-prepared:

1. Each existing project must be approached as if it had never existed. It is necessary to determine the role each certain project plays in your company’s growth and efficiency and to answer the questions on how many people this project involves and whether or not you could perform it using less people.

2. As a result of the above inventory the IT leaders should come up with a list of things that really matter.

3. IT leaders should try to conserve as much of their budget as possible. They should recognize and respect the power of the cash on hand as they try to save their business for the future.

4. It is of high priority to protect the IT organization’s personnel and to assure people that in case of collapse the company will be able to save only those who make the greatest contribution.

The expectations versus the reality of IT are different by nearly each measure. In order to close the expectations gap, IT leaders must change to innovate. Gartner analysts say that the leaders focusing solely on technology are likely to lose in near future. Gartner sees this innovation in human activity. This activity consists in delivering faster to get IT leaders into business and radically restructuring IT money spending. Right before the world’s financial crisis most of the IT leaders were focused on speeding up their transactions. Gartner believes that after the crisis IT leaders will start investing in connecting people to speed up decisions.

Under the new business conditions it is important for IT outsourcing services providers to deliver agile business processes in order to support rapid change and business outcomes.

Offshore outsourcing providers will have to change some of their infrastructure components: to modernize those of high priority and to get rid of those which are less important. As for the companies searching to outsource their processes, their IT managers will have to learn not only how to save, but also how to reprioritize their IT resources that really matter.

Historically, IT companies have delivered technology, not business performance. However, as believed by Gartner, it is no longer enough. All outsourced projects must deliver the promised improvements in business performance. From now on businesses will only be in need of IT that can deliver true value in terms of business performance.

(Sources used: Gartner

, The Economist )
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