The Dutch, who know a thing or two about frugality, have a saying, “Goedkoop is duurkoop.” The English translation: “Buying cheap is buying expensive.” And nowhere is that adage more fitting than in outsourcing.

University of Tennessee researcher Kate Vitasek offers an in-depth look at how shortsighted cost-cutting and nine other behaviors can hurt companies in her new book, “Vested Outsourcing,” which was published earlier this month by Palgrave Macmillan.

For her study, Vitasek looked at outsourcing deals and identified the most common mistakes companies make when contracting. Among them: Micromanaging, lack of formal governance, metrics obsession, and, of course, cost-cutting as a quick-fix measure.

Cost-cutting, Vitasek writes, is the easiest to identify. Companies desperate to trim the bottom line take the cheapest offer. The result is a tradeoff in quality, service or both.

For more about the study, visit Vitasek’s blog, which features a wealth of articles. It makes for great snow day reading. And for previous posts published on this blog about the subject, see the following: Wasting Money is Bad for the Bottom Line, When Mistakes add up to Millions, and The Real Cost of Offshore Outsourcing.♦

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admin Outsourcing, This Week in Tech News CIO, goedkoop is duurkoop, Help Desk, Kate Vitasek, Outsourcing, the Dutch

The economic downturn may be lingering here in the United States, but in India, the financial situation is quickly becoming rosy. According to an article published today on MSNBC.com, India-based outsourcers such as Wipro, Infosys and Tata experienced a surge in U.S. contracts during the last quarter and are responding by hiring more workers and lifting salary freezes.

IT will gain a new nickname, the “No-Help Desk.” Employee morale will suffer.

That’s great news for the Indian workforce, but bad for U.S. companies. While the short-term cost savings from offshore outsourcing may appear to make it an attractive solution, here’s what all-in-one outfits like Wipro and others will deliver in the long-term:

• Poor customer service: The “help desk” becomes a place where, instead of help, your customers — er, employees — get only frustration. That equals longer hold times, increased abandonment rates, and more.
• Degradation of the help desk reputation: IT will gain a new nickname, the “No-Help Desk.” Employee morale will suffer.
• Increased shadow and underground support: Instead of waiting on hold for a half-hour or more, your employees will search self-serve help outlets, which are proven time-wasters, or they will ask the office software “expert,” and end up wasting the time of two workers. The lost productivity costs with this one are staggering.

Back in May, I wrote a rant on this subject that deserves repeating: Read more…

admin Outsourcing India, Infosys, msnbc.com, offshore outsourcing, recession, Tata, Wipro

If there is one constant in these sour financial times, it’s that there’s no dearth of stories about corporate waste. And that’s good news for us, as our company makes a living boosting productivity.

Training and support transform smart phones from “fun toys” into powerful business tools.

The most recent is a witty report published by TechRepublic, titled “IT Budgets: How to waste money.” The nine-page report offers 10 tips on effective money-wasting, including doling out too much money on energy, unnecessarily purchasing new hardware, and spending too much on travel.

All of the tips are worth a look, but here are a few we’d like to amend/elaborate upon:

Spend too much on mobile technology. Yes, spending too much on mobile technology is a waste of money – when you don’t show your employees how to get the most out of it. Training and support transform smart phones from “fun toys” into powerful business tools. Write that down. Read more…

admin Office 2007, Outsourcing Office 2007, smart phones, software support, TechRepublic, upgrades

I cannot say if productivity was a watchword 10 years ago, when salaries were fat and perks were plenty. It’s definitely on everyone’s minds these days though, when many companies have smaller staff and employees have fatter workloads.

Throw social networking and other electronic communications like e-mail and instant messaging into the mix, and productivity becomes a greater challenge for employees.

In particular, the study found that those who IMed frequently with their bosses were more productive than those who didn’t.

Well, that’s what conventional wisdom says.

MIT and IBM present a different case. In a study published in April, researchers at the two institutions found that instant messaging and other forms of constant communication actually increase employees’ productivity levels. Another win for Chatty Cathy. (For Win 1, see the post “Facebook Addicts + YouTubers = Sharper Employees?“)

According to an article by Jacqui Cheng of Ars Technica, the researchers analyzed the e-mail traffic, buddy lists and social networking friends of 2,600 IBM consultants over 12 months. They compared the consultants’ communication patterns against their performance in billable hours. Those who maintained constant communications averaged an increase in revenue of $588 per month over the average, while those who did not produced $98 per month less than the average. Read more…

admin Outsourcing, ROI, Worker Productivity Ars Technica, FACEBOOK, IBM, Jacqui Cheng, MIT, Mobile Devices, YouTube

People inside Microsoft have openly related a story about Bill Gates’ initial evaluation of Office 2007. He congratulated them on a number of new features, but the additions weren’t exactly fresh; they were introduced with Office 97.

Hearing about Gates acting human is always a pleasure, but why would anyone at Microsoft admit that he didn’t know about features that had been a part of one of his company’s premier products for 10 years? (Another question: How is it that they still work there?)

The answer is simple: Office 2007 does what it was designed to do. That is, to make it easier for users to find features that were buried in previous versions’ meandering menu structures. It turned Gates into a guinea pig, enlightening him about product functionality he didn’t know existed, even though he had undoubtedly seen it before.

But the redesign’s success brings two new challenges to help desks, which they didn’t face with earlier Office upgrades.

The first is bringing users up to speed. The new interface renders even the most perceptive employees helpless when trying to complete tasks they’ve done for years. Read more…

admin Office 2007, Office 2007 Migration Assurance Program, Outsourcing, ROI Bill Gates, guinea pigs, migration, Office 97, upgrade

This year promises myriad challenges for CFOs across the globe. Chief among them, according to a December 2008 USA Today study, are increasing productivity and profitability.

The study asked 1,400 CFOs which issues would Read more…

admin Outsourcing, ROI best-of-breed, CFO, CIO, USA Today

The economy may be showing some signs of rebound, but that doesn’t mean CIOs are back to their old spending habits. In fact, according to a report released this month by Gartner, four in 10 CIOs significantly cut budgets in the first six months of 2009.

What, or whom, to cut is never easy, especially when the software for the upcoming migration has already been purchased. It’s easier to drop services than it is to lay off employees; services don’t have a face or a family. Read more…

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You can weather the economic downturn lamenting the halcyon days of boundless IT spending and grand tech projects, or you can treat it as a challenge, as a time for reflection and behavior modification. At least that was the sentiment at the recent MIT Sloan CIO Symposium, where CIOs and their ilk met to discuss – what else? – the recession and its effect on the role of the CIO. Read more…

admin Outsourcing, ROI, Tech Babble CIO.com, MIT Sloan CIO Symposium, Outsourcing, Satyam, SearchCIO.com, Wall Street Journal

Dear Mr. CIO:

I understand we’re in a recession, and the pressure for you to prune your budget is great, but how on Earth do you expect to get the same quality IT outsourcing for less money? I didn’t major in business, but I do know that in a capitalist society, nothing is free. Didn’t they teach you that in economics 101? Read more…

admin Access, Excel, Outsourcing, ROI CIO, Help Desk, IT leaders, Outsourcing, ROI

The comments in a recent PC Helps customer satisfaction survey sounded as if they were describing a trusted crisis counselor rather than a software consultant:

“Without PC Helps, it would be like having no air to breathe.”

Sheesh. I think we’re good, but that description of what our consultant accomplished may be a smidge extreme.

What inspires such over-the-top praise? Is it that our techs are software ninjas, or that outsourcers don’t meet service level agreements in general, and, when a help desk treats a customer like a customer, it’s shocking?

I’d say it’s the latter (okay, maybe a combination of the two).

If IT transformation is the entree, then improving service is the parsley sprinkled along the edges for aesthetics — thrown on just because it’s supposed to be there.

Despite the fact that most CIOs agree that strong service levels are vital to a successful outsourcing partnership, few pay attention to them. If IT transformation is the entree, then improving service is the parsley sprinkled along the edges for aesthetics — thrown on just because it’s supposed to be there.

In a recent CIO.com article, Ron Kifer, CIO of Applied Materials, explains how he cut IT costs successfully during an economic downturn. The article states that Applied Materials “maintained high service-level agreements,” but doesn’t divulge the method of measuring. Read more…

admin Outsourcing, ROI, Worker Productivity CIO.com, Outsourcing, recession, ROI, service level agreements, software support