Six-sigma Outsourcing

Introduction: Outsourcing can be one of the most powerful weapons in the modern IT manager’s arsenal, but it is also one of the most misunderstood, and if not managed properly — one of the riskiest.

Outsourcing versus Staff Augmentation:

1.       “We outsource most of our system development,” one IT manager declares.

2.       “We have contractors from three firms doing the coding. All we do is managing the project.” While this is one way of accomplishing system development, it is not outsourcing. Rather, it is staff augmentation.

3.       The distinction is an important one. There are fundamental differences between staff augmentation and outsourcing, the most critical of which is day-today management of the staff. In staff augmentation, whether they are called contractors or consultants, the people who are hired function as an extension of the IT department.

4.       Except for the fact that their salaries and benefits are paid by a different company and their services are

The Outsourcing Decision:

Like all decisions in a Six Sigma company, the one to outsource should be based on facts and made only after a thorough assessment of the benefits to be gained and the potential risks that may be incurred.