Information Technology outsourcing

Information Technology (IT) outsourcing

I wanted to share my view about Information Technology (IT) outsourcing in Malaysia, during my observation for the past 8 years I have noticed that it is becoming a trend for global companies to outsource their IT function.

One of the reason is that IT is not the company core business and they would like to save as much cost of hiring and training staffs. By outsourcing the IT function, they can rely for the IT service provider to provide. One of the example is the IT outsourcing by Royal Dutch Shell (Shell) to Hewlett Packard (HP) whereby Shell has outsourced its entire End User Computing (EUC) division to HP as part of IT infrastructure outsourcing. By doing so, few thousand employees was transition from HP to Shell and and Shell hopes to have further savings from its IT function, it is also to optimize and capitalize HP expertise in technology.

IT Infrastructure Technology is key to the success of Shell’s business strategy, and IT (infrastructure) is the pervasive technology that impacts the performance of all its business activities. Between 2002 and 2005, Shell accomplished a successful initiative to globalize its IT infrastructure. The organization, technology and processes were standardized and streamlined, while many parts moved to Malaysia and India. Reliability, global working and unit costs improved immensely, providing Shell with robust and efficient infrastructure services. Shell will now focus on new requirements and service levels, leaving the development and delivery of services to the service providers.

For IT infrastructure strategy, architecture and planning, all partners will have to contribute and seek accommodation of other views. Though cost levels need to be closely managed, Shell needs to provide space to pursue other goals as well, such as collaboration on business innovations. Shell created the Innovation Council which is a team including representatives from the service providers that is tasked with developing opportunities that can improve business performance. Shell has strategic service providers for products, applications management and infrastructure management. Together with some critical niche service providers and its own IT organization, they have forge a “OneIT” model in which service providers work together driven by the goal to improve Shell’s business, not just their own bottom line. Shell refers to it as the ecosystem. With all players working together it thrives, but if one or more won’t play, it falters.