labels: industry - general, it news
Publication on guidance on governance of outsourcing launched news
Our Infotech Bureau
30 August 2005

New Delhi : The IT Governance Institute (ITGI) has released Governance of Outsourcing, part of five-subject series on "IT Governance, Domain Practices and Competencies", being brought out by the IT Governance Institute of Information Systems Audit and Control Association (ISACA). The book is aimed at helping organisations effectively govern their relationships with outsourced service providers

The outsourcing industry in India is estimated to reach $32 billion ($20 billion for BPO and $12 billion for KPO) by 2010. This is despite recent studies pointing out that more and more buyers of outsourcing services are expressing dissatisfaction with their service providers and prematurely terminating their outsourcing relationships

Ensuring companies receive value for their outsourced work is not only beneficial for the industry, but also for those employed by the ITeS companies. Outsourcing, has emerged the fastest growing segment for employment, and is estimated to be growing by 45 per cent annually.

Governance of Outsourcing focuses on the resource management domain and notes that only 24 per cent of the organisations surveyed do not outsource any IT services. Those who do outsource cite lack of internal technical expertise (48 per cent) as the most common reason for outsourcing, followed by the need to reduce costs (42 per cent).

According to Alan Simmonds, CMC, principal consultant, GovIndex, UK, and co-author of the publication, "Outsourcing is about how an organisation understands and leverages its capabilities. Accordingly, cost reduction does not necessarily mean that value is retained or added. Outsourcing is a strategic function and resource, and it must be governed accordingly."
According to the publication, effective governance of outsourcing requires that clients and suppliers:

  • Continuously review and improve upon the contract to benefit both parties,
  • Include in the contract an explicit governance schedule, which contains the definition of the assets and processes to which the legal agreements apply,
  • Establish clear roles and responsibilities for decision making, issue escalation, dispute management and service delivery,
  • Allocate resources, expenditure and service consumption in response to prioritized needs,
  • Continuously evaluate performance, cost, user satisfaction and effectiveness,
  • Ensure ongoing communication among all stakeholders.

However, despite these best practices, "ITGI's research found that only one-quarter of respondents have a defined governance system in place to manage and control the outsourcing contract," said David Gilmour, another principal consultant at GovIndex, UK, who also co-authored the publication.

Each of the five publications in the series focuses on an aspect of one of the five domains of IT governance — risk management, value delivery, resource management, strategic alignment and performance measurement. The publications are based on a study of 200 IT professionals from 14 countries, including the Asia-Pacific region, conducted by ITGI and Lighthouse Global.
Governance of Outsourcing is available at the ISACA Bookstore (www.isaca.org/bookstore) in print for $30 and as a PDF download for $20.

Founded in 1969, the ISACA (www.isaca.org) is devoted to establishing standards in global IT governance, control, security and assurance. In India, ISACA has nine chapters located in Bangalore, Chennai, Cochin, Coimbatore, Hyderabad, Kolkata, Mumbai, New Delhi and Pune. The ITGI (www.itgi.org) was established in 1998 to advance international standards in directing and controlling an enterprise's information technology to support business goals, optimise business investment in IT, and appropriately manages IT-related risks and opportunities.




 search domain-b
  go
 
Publication on guidance on governance of outsourcing launched