Ian S. Hayes

Ian Hayes is president of Clarity Consulting, Inc. where he provides management consulting on IT strategies, emerging trends, markets, and challenges. He has advised dozens of Fortune 1000 companies on many IT issues, including outsourcing, process redesign, e-business strategies, efficiency enhancement, productivity and service level metrics, service offering development, and product and service positioning. A frequent and popular speaker on a variety of IT topics, Mr. Hayes is also a regular contributor to Cutter IT Journal , writes the Managing e-Business column for Software Magazine, and is on the editorial advisory board of the Enterprise Application Integration Journal. He has also written dozens of articles and white papers and coauthored two IT books. Mr. Hayes co founded Language Technology, Inc., an early software redevelopment product vendor, and served as a manager at Keane, Inc. before founding Clarity Consulting in 1993.

For more by Ian Hayes, visit the Cutter Consortium Bookstore:

• Strategies for Effective Project Portfolio Management
• Developing a Global Sourcing Strategy

Trends and Realities in Global Sourcing

An interview with Ian Hayes, Senior Consultant, Cutter Consortium

On the heels of his latest Executive Report, " Developing a Global Sourcing Strategy," Ian Hayes talks about trends in the global sourcing of IT, lesser-known centers of IT expertise around the world, and an organization's "sourcing maturity."

Q: What trends do you foresee in global IT sourcing within the next year?

A: By far, the biggest change I see is that sourcing will become a mainstream part of IT strategy. It will increasingly be viewed as a normal way of doing business rather than an unusual practice. It will increasingly be integrated with an IT organization's processes rather than being segregated as a sideline endeavor. If you take a look at IT organizations today, they are already starting to make the transition from using outsourcing as a tactical, one-off, reactive strategy to treating it as just one of many options available to get work done. Evidence of this transition isn't hard to find. Just consider how many IT organizations are seeking to establish program management offices (PMOs) and to utilize service level agreements (SLAs), elements that are foundations for longer-term outsourcing efforts.

Another trend gathering steam is the use of automated tools to help manage outsourcing efforts. The number of tools, and their quality, has grown tremendously over the past year, and I believe that they will only get better. These tools are ready for prime time now, and I expect IT organizations and outsourcers to adopt them at a rapid pace, and take the management of outsourcing engagements to a whole new level.

As the economy improves over the next year, I also expect that the anti-outsourcing backlash will start to wane. At the same time, the economic (cost) pressures on companies to outsource will start to moderate, and some of the more marginal examples of outsourcing, where benefits are few, will disappear.

Q: You mention in your Executive Report about the need to balance risk within the sourcing portfolio. What risks are there in the sourcing portfolio that IT managers and leaders do not have experience in handling? And, how can they gain that extra knowledge they need?

A: IT organizations have always faced substantial risk in managing project execution. When you add outsourcing to the mix, which involves a far more distributed form of project execution, you've greatly increased project complexity, greatly increased the management burden, and therefore greatly increased the odds that the project will go awry.

Managing distributed projects effectively is probably the most significant risk that IT practitioners face when they use global sourcing. To learn how to better manage distributed projects, IT managers and leaders must first realize that they have a skills deficit in this area. They have to discard their old notions of what it means to use consultants on a project -- generally based on supplemental staffing models -- and think out of the box. What kinds of processes or collaboration tools would help a dispersed team? How can you build camaraderie and personal relationships among remote team members? How can you improve communications to reduce ambiguity and misunderstandings? Eliminating sourcing risks completely is impossible, but there is no shortage of tools, articles, expert assistance and support groups that IT organizations can exploit to gain expertise in managing distributed projects.

The other kinds of risks present in a global sourcing model are the standard outsourcing risks: security of intellectual property, geopolitical unrest, backup and contingency planning, lax or nonexistent legal regimes. Through careful selection of projects, and diversification among sourcing options, IT organizations can help mitigate these risks. They can also go outside of their own organizations and seek assistance from risk management, legal and security specialists, to craft appropriate strategies to avoid and contain risks that do materialize.

Q: India is a popular choice for offshore development work, and an IT manager in an industrialized nation might automatically think first of shipping work to that country. But rather than stress what country to turn to, you advocate that IT look primarily at the provider. Are there some "diamond in the rough" providers out there? Where might they be found?

A: Although I wholeheartedly believe that companies must consider service provider capabilities first and foremost, I'm going to refrain from naming specific service providers in this forum. Instead, I'd like to mention some "off the beaten track" geographies that companies might want to consider as they look for talented service providers. Latin America, unbeknownst to many, has a growing outsourcing industry, which is useful for outsourcing services where the native language, in this case Spanish, is an advantage. In Asia, China is garnering a lot of publicity, but its outsourcing industry is still in the formative stages. However, despite language barriers and less mature offerings, other players, such as Vietnam, are gaining some traction primarily due to the extremely low labor rates being offered by service providers. In Eastern Europe, Russia remains the best known contender, but opportunities are growing within some of the countries that have recently joined the European Union. Although not as experienced as India, these countries offer a good balance of skills, lower salary structures and reduced risk. Estonia, in particular, has devoted itself to building an information-based economy. For a small country, it has an abundance of high-end, quality programmers with a demonstrated ability to create cutting-edge software such as Kazaa, the widely used music-sharing application, and Skype, an Internet phone application that hopes to supplant traditional landline-based telephone conversations.

Q: Tell us about the value of "sourcing maturity."

A: Sourcing maturity refers to a company's level of experience with outsourcing and the quality of the processes, tools and governance structures it employs in its engagements. The more experience an IT organization gains with outsourcing, the more it knows what will work and what won't. While low-maturity organizations need to stick to small, highly defined, standalone assignments to be successful, high-maturity organizations can source almost anything. They can avoid making common "beginner's" mistakes and start to take advantage of more sophisticated and complex outsourcing arrangements. They are able to do so by shedding their preconceived notions of sourcing, putting the tools and processes in place to handle more advanced projects, and integrating outsourcing into their normal ways of conducting business rather than treating it as an anomaly. As an example, think of how many companies use an outside provider for payroll services. No one thinks of this practice as strange; in fact, it might be unusual for a company to decide to perform payroll inhouse! Another hallmark of a mature organization is its ability to build true partnerships with its sourcing providers, and use those partnerships to gain greater value than simple hourly rate reductions.