Forget about outsourcing or insourcing – jump to co-sourcing!
I was struck once again at the recent Noord Group CIO Dialogue in Dublin that the trend of insourcing featured significantly throughout the event. For me, discussions around that recurring theme are still missing a key ingredient: how to leverage niche expertise in strategic partners.
The rise of insourcing
As IT departments continue to face rising demands, there has been a distinct move towards insourcing any development that is considered core to the business or a strategic differentiator. Outsourcing is now mainly considered for IT that is more of a commodity (ERP maintenance and the like).
However, coupled with the rise in insourcing is an exacerbation of the age-long challenge of hiring and, more importantly, retaining the best development staff. This sentiment is echoed in Forrester’s recent “foreboding news” that tech talent is going to be harder and even more expensive to find in the next two years. Some CIOs at the event noted that top technical staff can often move on after only 18 months, and often move to other organisations in the same vertical.
Churn like that, and the resulting disruption to teams can belie the original aim of delivering internal differentiated innovation. To top this challenge off, even if you do manage to retain your exceptionally talented staff, organisations often struggle with keeping their skills up to date.
It’s therefore pretty obvious to me that the insourcing trend is not optimal by itself. If the aim of insourcing is to develop a sustainable innovation engine to deliver differentiated technical solutions for your organisation, there is a better way!
Co-sourcing to deliver sustainable innovation
Most leaders will recognise that high levels of collaboration are now one of the key indicators of a successful, agile business: collaboration between team members, collaboration across silos. A culture of collaboration still eats (digital) strategy for breakfast. But even cracking the collaboration nut internally is often not enough; digitally mature organisations also collaborate well outside their own organisational borders.
What does this look like? It usually means forming not just tactical, practical, outsourced partnerships with tech vendors, but more strategic co-sourced partnerships that augment your ability to innovate. Such partners often have expertise in particular niche areas and work closely with your own employees to accelerate development and delivery of particular solutions. Often the unique combination of an organisation’s domain expertise with a partner’s technical expertise can result in differentiated offerings and speed-to-market that even experienced internal teams would be challenged to deliver.
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What are the advantages of investing in such a partnership?
If you have an urgent need to meet a business goal and you currently don’t have the specific capability or capacity to deliver – working with a trusted partner can often deliver results quicker than any attempt to recruit a new high-quality team, and get them working together efficiently. Many of the CIOs we talk to express how this is particularly useful for prototype work which may or may not turn into long term investments.
Churn rates for high-quality technical staff are on the increase and replacing expert technical staff can take a lot of time. A specialist technology partner has much more of an incentive to work with you towards joint business goals over a longer term, and they are well used to managing ebb and flow of specialist staff while maintaining consistently high quality to their partners.
Staying up to date with the latest technologies and methodologies is a constant challenge in this day and age. A specialist technology partner can not only bring news about best practices and innovation from different verticals but, more importantly, can bring experience of how they are being used in different areas. Knowing potential pitfalls to avoid is key to successfully leverage emerging technologies.
In addition, this experience from across a range of projects and industries gets shared with your in-house teams. The constant flow of learnings they get as a result can often help in retention of the talent you have.
To sum up, your choices around sourcing tech talent can depend on your specific organisational needs at a point in time, but choosing to build a co-sourced partnership in tandem with your in-house team can help guarantee business continuity, as well as innovation and speed-to-market. When entering into such a collaborative arrangement, the ultimate goal is to create a competitive advantage through the relationship, one where both parties have a shared vision of long term success.
Building partnerships like this is not all plain sailing though – it takes time and effort to identify the right partner for your organisation. Finding the right mix of expertise and the right cultural fit takes a little more effort than just publishing an RFP. Here at NearForm, we’re lucky to have found many great partners to work within the way described above. If you want to hear more about our experiences, or discuss how you can build a true collaborative tech partnership – please do drop me a line at [email protected].