Critical IT staff shortage caused a difficult situation, in particular in insourcing and outsourcing markets. The attendees of the ITSF that was held in Kazan for the 14th time this June in a new format of a closed club ITSF Club 2021 discussed the problems they were facing in a new business environment. Participants of the round table discussion talked about the most pressing issues in insourcing and outsourcing segments and worked out a list of recommendations for running a business in the current environment.
Rule 1. Define Insourcing and Outsourcing Areas
IT insourcing boom has captured the market: a growing number of companies, in particular from large corporate segment, enhance IT insourcing practices and create their own teams of developers in the course of digitalization of their businesses which further increases IT staff shortages.
“Over the past few years, from initially a support function IT turned into one of the core business functions that adds value and without which business processes are simply not viable at all,” said Alexey Klepikov, Vice President and Head of IT Cluster at MTS Bank. “In the light of this, the risks associated with the outsourcers became too high for some customers and they decided to perform this function within their own company which consequently brought about an insourcing boom that we are witnessing today.”
As a result, insourcing and outsourcing areas somewhat swapped places.
“Earlier, about 10 years ago, businesses applied to integration and outsourcing companies for implementation services as well as for their skills and competencies whereas they had in-house support service, i.e. 1st line support and field engineers, now there is a completely different tendency—businesses tend to outsource support service whereas integration is performed in-house,” pointed out Marat Gimatov, Head of Technical and Maintenance Services at ICL Services.
Experts agree that competencies associated with core business functions should be developed in-house today.
“Core business functions must be performed within the company whereas the support functions can be outsourced,” agreed Pascal Barbier, IT Director at Avtovaz. “However, it is important to take into account company history, its location and the capabilities of the local personnel market. 700 IT experts work at Avtovaz now but 10 years ago there were twice as many IT professionals.”
Alla Podgornova, Deputy General Director for Operations at Ingosstrakh, also shares this view:
“Those particular skills and competencies that can be easily described, transferred and do not require long training to be mastered can be outsourced.”
However, one should thoroughly weigh up the risks when defining the area of outsourcing.
“There used to be a tendency to outsource call centers. Outsourced call centers can be a real solution when we are talking about information campaigns. But there can also be a trap here: the customer base is subject to additional risk when it is transferred to the outsourcing company and businesses are challenged to protect these data,” expert pointed out.
IT infrastructure and user support and outsourced call centers are gradually becoming the gold standard in outsourcing but not all Russian companies are in a hurry to implement it.According to Lenar Rakhmatullin, Head of Service Desk at ICL Services, the customers with rather mature IT infrastructure management processes (and there are a lot of such companies among Russian divisions of international companies) are more likely to outsource 1st line support whereas Russian companies are trying to provide as many services as possible in-house.
Rule 2. Get to Know Your Supplier
How to audit IT service provider and how to hold a bidding—these are burning issues today.
“In the service segment of IT market, there were a lot of substandard suppliers providing poor service at allegedly low prices but it was very difficult to get rid of them. As for the outsourcing and particularly the outstaffing companies, it’s not only that many of them don’t have competencies, all they usually have is a team of very talented HR experts and nothing else really,” Alexey Klepikov described the problem. “What is to be done with the fact that many suppliers now staff a project team from scratch? And whatever fine or penalty we might think of, the lost profit is usually much larger. That’s why it’s a real challenge for the businesses not to get into trouble.”
The attendees of the round table discussion held within the framework of ITSF agreed that it’s important to cross-check suppliers before entering into any agreements and to thoroughly understand the hiring process on the supplier’s side, that is to know who and how interviews candidates and whether the recruitment consultant endorses values of the customer.
Marat Gimatov told the attendees about such practice as customer’s visits to the outsourcing company before the start of bidding. He also pointed out that such visits are more common among Western customers.
Best practice is when the supplier makes the corresponding training certificates of his employees available to the customer to support his claim to provide this or that service and then the customer conducts technical interviews with the supplier’s candidates and approves a list of professionals on supplier’s team that will implement his project.
“Not until you conduct thorough technical interviews can it become possible to understand that a candidate is far from being a Senior Java Developer, he is more likely to have read about it somewhere and his current qualification is Middle Java at best. This is very important because the price tag is different for these qualifications. As a result, the service is claimed to have been provided accordingly and the hours are paid,” explained Alexey Klepikov.
Ruslan Vagizov, Executive Director of ICL Services, told about an interesting experience his company had. In the international market before binding large contracts are signed, an intermediary is often hired to perform the bidding procedure and due diligence. Such agencies receive technical requirements from the customer including budget and quality requirements and then expertly choose suppliers on behalf of the customer.
“The agency can do it properly; they know all weaknesses and vulnerabilities of the outsourcing companies and hit these targets. If these burning issues and problems are not properly addressed and there are obvious flaws, then the agency lets the customer know about it. Our company went through such due diligence review when we were about to enter into a major agreement with a German bank. An audit team consisting of 10 experts came to our company. They stayed for a week and it was a real mayhem. The experts bombarded us with tricky questions but we managed to make it to the top of their ranking and won this contract although it was indeed tough. For our own part, in the course of this audit, we had a chance to better understand what the customer really wanted,” the expert shared his story.
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