So Many IT Projects. Too Few Resources
Technology is the backbone of virtually every organizational project. It’s an enabler, a differentiator, a requirement – and it’s generating massive amounts of work. Every year, project managers and PMOs report they don’t have enough resources for all of the IT projects in the funnel. They are drowning in projects and need help executing the ones that bring value to the business. That help isn’t always easy to find and budget often plays a major role.
For these reasons and others, it’s not surprising that more companies are outsourcing certain skills in order to focus more on what they do best. IT budgets spent on outsourcing have grown as much as 2.4% since last year and more than a third of companies plan to increase the amount of work they outsource.
As end-user demand evolves, so too must the technology to support innovation. A skill needed yesterday may be obsolete in only a matter of a couple of years. It’s rarely possible to hire a few experienced developers who can do it all, year after year, project after project. Technology doesn’t stand still and unless companies invest in ongoing education with plenty of practice projects, they can easily find themselves with a team of talented people well-versed in legacy systems that are no longer relevant. Organizations are challenged to attract and retain resources who are nimble to change – or should they?
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Many companies determine they can keep up with the rapid pace of technology better if they outsource their IT projects to a consulting firm. In this way, the consulting firm is on the hook for keeping the right mix of skills. Companies have the freedom to pay only for what they need, even if they give up some control. Both sides could find arguments for cost. Outsourcing can be expensive and difficult to budget for, yet continually paying salary and benefits for increasingly more resources can quickly overwhelm an IT allowance.
There are plenty of pros and cons to both scenarios, so we put together a short list of considerations any organization should keep in mind before making a decision.
In-house or Outsource? Top 5 Factors to Consider
1. Time-to-market
The success of a project often rides on how quickly it can be rolled out. The longer a project takes, the more resources and costs it consumes. If your project needs to be accelerated and your current team doesn’t have immediate bandwidth, outsourcing is the way to go. Outsourced teams are basically on-demand. You pay a premium to have them at your beck and call, ready to go with the right level of system expertise.
If, on the other hand, you have time on your side and the proper project and resource management capabilities to “reserve” the resource(s) your project requires before they are pulled onto another project, you can effectively keep the project in-house. It’s important to know when resources will be available to you and if they will be dedicated to your project or working on multiple projects at the same time. This will directly impact how long your project will take to complete.
2. Technology
Technology can be your best friend or your worst enemy. If it’s a new technology stack or a competency area your current organization lacks, outsourcing is the best option. You don’t want to chance someone assuming they can “figure it out” when there are experts standing by at a consulting firm who won’t delay or threaten the project with their learning curve. Your peace of mind is worth taking the project outside of the company.
Alternatively, if you have some technical debt on older technology, building it in-house can be a great way to retain your current team if they’re feeling stagnant on career growth and/or technology trends. You can often extend the life of a legacy application or system simply by reworking code to make it better fit your needs. Be sure you aren’t settling, however. Technical debt is created in the first place by taking shortcuts instead of applying the best overall solution.
3. Solution or capability being implemented
Some things are so specialized, you need extra help. If you are dealing with a niche implementation, such as SAP Hybris, it will be challenging to hire enough internal resources to complete the project. It’s better to outsource the project and in parallel, train up and/or hire for the internal team to support after go-live. In this way, you fast-track implementation with the assurance that the external support is only temporary.
Be sure your internal team is fluent on the technology before your outsourced team completes their portion of the job. You are paying for their skills and their knowledge, so be sure to leverage all you can while you have them on your project.
4. Budget
Budget is always at play in any IT project. How you budget for outsourcing will be different than how you budget for headcount. If you are going to outsource, it will have an Outside Service Spending (OSS) budget with the right amount of funds to support successful delivery.
If you decide to keep your project internal, factor in the existing functions and support you have to increase the budget appropriately to hire additional headcount. Be sure you consider whether your project will require one or multiple resources and what those particular skills will cost you.
5. Skill set
What does your resource pool look like? If you are going to take on the project internally, do you have the appropriate skill set to ramp up and deliver it correctly? Oftentimes, people will raise their hand to jump on the next big project, but the reality is those resources will end up costing more money in the long run due to knowledge and ramp-up time.
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If your team lacks necessary skills, your current resources are over capacity or they are unavailable, outsourcing can save you precious time. There’s something to be said for being able to pick up the phone and cross a to-do off your list. Keep in mind your consulting firm will provide the exact expertise you need for only the time you need it, or they can continue to provide their service on an ongoing basis. Either way, you get the skill(s) you need without the wait.
Whether you choose to outsource your IT projects to a consulting firm or hire the talent you need to complete your internal team, it is critical you have a solid plan when you go-live to not only support the implementation but also deliver new capabilities.
