"Stringent customer demands are a good thing: they force us to develop our methodologies and become more skilled in our expert roles. This raises our skill levels."
Outsourcing is the big buzzword in the IT industry. But what does outsourcing really mean to an IT consultancy company? "We're not set up for conventional outsourcing," says Per Pedersen, Director Operations India at Cybercom. We work with application management, which is a type of outsourcing for complicated development projects."
Outsourcing partnerships are set up through contracts or though selling an internal unit and then buying back the unit's services from a supplier. Different industries have different outsourcing configurations. At Cybercom, we primarily implement application management, which is a type of outsourcing for complicated development projects. Projects consist of small teams that implement Cybercom's processes.
"Our functional responsibilities are more demanding," says Per Pedersen. "Application management is about the customer having a clearly defined assignment and requirement specification. We then agree on a fixed price for the assignment, based on content of the specification."
Developing clear requirement specifications puts demands on customers, and application management puts demands on IT consultants who must thoroughly understand customers' operations to be able to work with all or parts of operations.
When companies manage their own IT projects, they often set up teams of employees who work part time with the projects, which take them away from their responsibilities related to core operations. This can easily become inefficient and can demand more time and money than is necessary.
When Cybercom implements application management projects, a small group of experts works full time on the project. The group uses Cybercom's processes that yield quick results and maximise resource usage.
"Acquiring an application management assignment means that customers trust you," says Pedersen. "Customers often put very important parts of their operations into suppliers' hands. This gives us great opportunities to offer proactive solutions."
Application management can expose consulting companies to risk because the price is fixed. This is an advantage for customers, because they get predetermined costs and committed, result-orientated consultants. And it can be advantageous for consultancies.
"Stringent customer demands are a good thing," says Pedersen. "They force us to develop our methodologies and become more skilled in our consulting role. In turn, this raises our skill levels."