Before Gertrude Ederle began her historic swim off of Cape Griz-Nez, France, sheunderwent extensive training for endurance and technique-even though she wasalready an accomplished record-breaking swimmer with Olympic medals to hername. Outsourcing IT may not garner the same attention as being the first womanto swim the English Channel, but it is no less important to gather as muchexperience and knowledge as possible on a small scale before diving in for the bigswim.

The trend toward IT outsourcing is increasing dramatically. According to a report byFoote Partners, as much as 45% of North American IT work will be outsourced by2005. And there are good reasons behind this trend. Bruce Caldwell, principalGartner analyst believes companies can generate 20-30% savings throughoutsourcing. This substantial savings potential isn't easily overlooked, yet it isn't thenumber one reason companies are choosing to outsource right now. In a recentsurvey by The Outsourcing Institute, the primary reason behind outsourcing is toimprove company focus. Other motives include freeing up internal resources,accessing top-notch capabilities, and accelerating time to market. The survey alsoindicated that 55% of firms who outsource do so within IT-more than any otherarea.

As more companies begin outsourcing some or all of their IT function, it becomesdifficult to ignore the competitive pressure. With competitors achieving their ITneeds at 20-30% less cost, and getting ahead in the market because of increasedfocus within the company, those who ignore the outsourcing trend could potentiallylose ground very quickly.

At the same time, outsourcing horror stories abound. According to Gartner researchfirm, half of the current outsourcing projects will not meet the company'sexpectations and will be considered failures. While the vast majority of these failuresare only minor disappointments where the company decides to outsource to anothervendor, certainly a few are major catastrophes. An anonymous case study in ITMetrics Strategies discusses a CIO who chose to outsource to beat competitors tomarket. The outsourcer had promised to meet a deadline his staff had said wasimpossible. When the outsourcer failed, the CIO couldn't rebuild his team fastenough to finish the job. In the end, the product never got to market at all.

So how do you secure all the benefits of this outsourcing wave without gettingdragged into the undertow? The key is strategic, selective outsourcing. According toCorey Ferengul, VP of the IT research firm META Group, an increasing number ofcompanies are choosing to outsource non-core IT tasks. Common responsibilitiesgoing to third-party providers include Web hosting, call centers, data storage, anddatabase administration.

"There's a learning curve and a life cycle to outsourcing," said Caldwell, "and it canbe expensive finding the right vendor, as well as going through the transitions oftaking your operations to that vendor." Stable, yet customizable IT functions providean excellent training ground for outsourcing. Any function with known benchmarksfor performance and results, as well as available, reliable outsourcing partners is agood place to start.

Ultimately you may want to outsource your entire IT department, but first you needto get a handle on managing an outsourced process. Some companies may discoverthey don't need to incur the risks and organizational chaos of switching to total IToutsourcing. By nimbly carving out and outsourcing small pieces of the IT functionthat deliver the most cost and quality benefit, companies may find they are alreadyreceiving maximum savings at minimal risk. However, they will have done somecarefully planned and executed experimentation before making that decision.

Gertrude Ederle once said of the sea "I never feel alone when I'm out there." Thechannel became her ally as she swam her way to England in record time. By startingon a small, strategic scale, you'll turn IT outsourcing into your ally rather than acold, tumultuous, foreboding sea.

Jenne Wason
Jenne works for The Pythian Group, a leading database management firm.