Anything Not Related to Your Core Business is an Outsourcing Candidate

These days, companies are under increased pressure to turn in a more solid bottom line. New technologies and new approaches give us in IT an amazing ability to help – but in most cases, companies’ heads are still stuck in 1990, thinking they have to do everything themselves. Often, IT teams are  part of the problem, fighting back hard at the thought of ceding any jobs or control to someone else.

Let’s discuss.

First, separate in your mind the concept of outsourcing services and jobs. They are not the same thing. For example, suppose you decide to retire your on-premises Exchange servers and switch to Office 365. You will still need headcount to manage that – mailboxes don’t create themselves, dist lists don’t populate themselves, etc. You might need less headcount, and if that headcount had strong PowerShell skills it could probably really reduce your headcount need for that particular service. But if the “extra” headcount has good IT skills, then you should be deploying them to gang up on business-specific services that can’t be outsourced to anyone, ever.

So we’re not talking about jobs. When I say “outsource” in this article, it doesn’t mean turning over all of your IT to IBM or someone, a pattern I’ve never seen work out well. No, I’m talking about outsourcing specific IT services, and in many cases merely outsourcing where those services are located.

My suggestion is to look at every IT service and ask yourself a simple question: is this a unique and critical part of our business that only we do? If so, it stays in-house, and needs the brightest minds you have working on it. If not, it is a candidate for outsourcing, and you need to look at it more closely.

I’m not saying “automatically outsource it,” because the decision isn’t that simple. This first question is just the starting point.

E-mail is a great example. If you have 5,000 mailboxes, you probably have a full-time Exchange administrator. That person might make $80k a year. Taking SharePoint and Office applications out of the picture, Office 365 (well, “Exchange Online”) would cost you $20k a year. Duh. But you’d still need that $80k person, right? Well… perhaps not. See, outsourcing is often interesting in that, while you still need administrative resources, they can be stupider or less skilled. They don’t need to troubleshoot the system, patch servers, or anything like that – they just need to create mailboxes. It’s likely a $40k office assistant could do that in addition to other duties. That $80k person can then be re-tasked to do stuff that’s unique to the business and that actually requires hardcore IT skills.

(Worried about your Internet connection going down? You should be. And these days, that should be a major IT investment, not buying more servers. Redundant lines from different carriers.)

Application hosting? Perhaps you outsource it. Both Microsoft and SAP support running SAP in Azure, for example.

Active Directory? Um, maybe outsource, with on-prem local backup.

File servers? Hmm. Azure does that. Maybe you outsource it.

Heck, you can run a direct line into an Azure data center and simply host your own VMs there, and have them “on your network.” You’ve outsourced the power, air conditioning, and square footage, which won’t reduce your headcount much, but it gives you fewer things to worry about back at the office.

Point is, it’s worth asking the question. Your business, and its IT people, should be dealing with things that nobody else can do for you. Everything else – power, phone lines, coffee service, janitorial services – it should be outsourced if possible, and if it makes sense. Not because it’s cheaper, although outsourcing often works out that way in a careful comparison. No, you do it because it removes distractions, so that everyone in the business can focus on what’s important to the business.

I have one client who took this to an interesting place by splitting the IT team. Team A handled only business-specific services, like line of business applications (some of which run on outsourced VMs, but they don’t handle the VM side, just the app). Team A was seriously engaged with business leaders and workers, and everyone, every day, focused on the business’ customers. That was all they had to do. Team B handled outsourced stuff – infrastructure. Some of Team B were pretty low-end folks, handling daily add/change/delete type work; some were higher-end and managed outsourced virtualization platforms and outsourced applications. They didn’t work directly with the business much, and they were a lot easier to find and hire, because their skills are more common.

It’s an interesting approach. I promise you, the only reason more companies haven’t started down this road is because most companies are pretty poorly managed, and so they all kind of level out against each other. But they’ll figure it out. So you’re going to need to start thinking about where you’ll fit in. Neither Team A nor B is a bad choice; they’re different. Team A might get paid more, but their skills are less transferable across the industry. Team B might get paid a bit less, but they’d have skills that would be usable anywhere. Whatever you decide, start lining up your skills and resume to point you in that direction.