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.
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