Small and medium enterprises need to identify the core businesses before outsourcing, are they actually ready?

It offers great convenience for companies outsourcing IT functions to outsourcing suppliers, but are they really ready for the upcoming challenges brought by outsourcing?

It takes Erin Hurry, the founder of Girls with Goals, three years to finally realize her dream---to expand her business and life counseling services to the Internet. Their goal is to assist women to achieve their career goals through building an online community and e-commerce website offering them online counseling, advices and office help services. However, this is a typical example of failed IT outsourcing.

Hurry's Girls with Goals.com website has been finally launched this year with a good startup of 250 members and 40 assistance offices. However, they have experienced various conflicts both in emotion and finance before they gain today's achievements. And all those conflicts were caused by the outsourcing provider's unfulfilled project.

The first web design and software development company that Hurry had outsourced to was a company located in Las Vegas which used to be defunct, and they promised to deliver the website within three months. The fact turned out to be that the website they delivered could not run at all and ten thousand dollars was spent in vain. Hurry recalled that, we over trusted them and it took us several months to reconstruct and make up loss for that mistake.

After the first failure, Hurry heard about a local web design company with a good reputation in Spotsylvania of Virginia where she lives now. She believed that this time she would be lucky to outsource the website design to them. Hurry paid them 9 thousand dollars as the total fee for which they at first demanded 18 thousand. Six months later, Hurry only got a home page and the work would cost another 30 thousand dollars if continued. In fact, the vendor outsourced the coding part of the project which impeded Hurry from finding other vendors to complete the website. "Actually, many web design companies are just the agents who also outsource their businesses." said Hurry.

The last three website development companies she resorted to were all located in New York, and they completed the website design at last despite the disappointing fact that it was six months later than she expected and their design work was accomplished by an Indian company that Hurry was originally not willing to. Besides, some code defects in the website made it vulnerable for hackers. When the product was delivered from the vendor, Hurry had already hired two IT employees to deal with the application development as well as code repair.

A bad beginning, but not to give up

This could be the most important lesson that small and medium companies have learned about outsourcing: never outsource the core business of your company to outsourcing providers.

For most companies, they had wide range of businesses to be outsourced and all the companies should do is to identify which part of the business was the core value of the company before action and consider seriously about outsourcing all the other businesses except the core business. This remark was made by Frank Casale, who is the CEO of an outsourcing research center. He also pointed out that if IT played the core function, then you should not outsource it.

IT outsourcing brings conveniences to enterprises, no matter in the case of application development and maintenance, customer service support, infrastructure construction or BPO. Casale said, "I like the word--- 'growth-outsourcing', because outsourcing really creates opportunities for small companies' development. For big companies, the effects of outsourcing may not be so obvious and what they need is to streamline the process and their personnel. Those numerous small and medium companies are concerning about gaining in flexibility by utilizing limited resources to trigger vertical, horizontal or comprehensive development."