US & Canada - Softtek

Momentum 2013 Conference

Wed, 08 May 2013 00:00:00 +0000

Ahilia, Inc. >> Hyatt Regency Hotel - Atlanta, GA

More information at: http://bit.ly/108AusL

Softtek acquires Systech to boost SAP capabilities

Wed, 13 Feb 2013 00:00:00 +0000

Business News Americas - Mexican IT nearshore services provider Softtek has acquired California-based Systech Integrators, a global IT solutions provider 100% focused on SAP solutions...

Softtek Acquires Systech Integrators, an SAP® Channel and Services Partner in the US

Thu, 07 Feb 2013 00:00:00 +0000

Softtek Acquires Systech Integrators, an SAP® Channel and Services Partner in the US

Acquisition strengthens Softtek’s Nearshore capabilities for growing demand for SAP solutions in the U.S. market and marks firm's presence as 1st Latin American provider in India

NEW YORK, NY – February 7, 2013 – Softtek, founder of the nearshore industry and leading global IT services provider dedicated to maximizing the value of applications, announces today that it has acquired Systech Integrators, Inc.®, an SAP channel and services partner global IT solutions provider. This acquisition will further strengthen Softtek’s SAP qualifications by adding capabilities for cloud, mobility solutions, and the SAP HANA® capabilities as well as cross-process and industry domain expertise to its solutions portfolio.

Systech, headquartered in San Jose, CA, has Centers of Excellence in the United States and India. With a 100 percent focus on SAP solutions, Systech’s consulting organization has a proven track record of delivering end-to-end services. The addition of Systech’s SAP solutions expertise and India delivery center enhances Softtek’s SAP capabilities through its existing network of global delivery centers (GDCs) in Mexico, Brazil, Argentina, Spain and China.

“We are thrilled about the new opportunities that lie ahead by joining Softtek,” said Sam Tyagi, CEO and Co-Founder of Systech. “The combined capabilities, experience and geographic scope will unequivocally provide new avenues to deliver SAP software-based innovations to the market.” Mr. Tyagi will now be the Managing Director of Softtek’s ERP practice for North America.

“The integration of Systech into the Softtek family is part of our ongoing strategic effort to help clients maximize the value of their investments in SAP solutions and create market-leading positions for themselves,” said Blanca Treviño, President and CEO of Softtek. “We have one of the strongest offerings for SAP solutions in the Americas, and now an even stronger Global Nearshore™ model.”

This announcement comes after Softtek’s recent acquisition of SCAi, announced in Q3 of 2012. Collectively, the newly acquired capabilities add to Softtek’s strong SAP practice of nearly 2,000 consultants and more than 800 implementations. Softtek’s SAP solutions account for nearly a third of the company’s global revenue. The company’s increasingly robust capabilities for SAP solutions include implementation, upgrade, cloud, analytics and application management services in North America, Latin America, Europe and Asia.

“SAP solutions empower more businesses to run efficiently and in real time than any other enterprise platform," said Robert Enslin, president of Global Customer Operations and member of Global Managing Board, SAP. “With our innovative solutions around SAP Business Suite powered by HANA, cloud and mobility, we are creating more possibilities for growth for our customers. To continuing delivering value to our customers while expanding on these cutting-edge innovations, we need a robust ecosystem of partners. With the acquisition of Systech, we expect Softtek to be an even stronger partner to deliver SAP software-enabled innovation and agility to our customers.”

Softtek's new ERP North American practice will operate under the name "Systech, a Softtek Company" for a limited period of time.

Find out more about Softtek’s practice for SAP solutions at Softtek.com/sap, follow @Softtek on Twitter, connect with Softtek on LinkedIn and read Softtek’s blog .

About Softtek:
Founded in 1982, Softtek is a global provider of process-driven IT services with more than 30 offices in North America, Latin America, Europe and Asia. With nine Global Delivery Centers in Mexico, China, Brazil, Argentina, Spain and India, Softtek helps improve time-to-business-solution, lower costs of existing applications, deliver better engineered and tested applications, and produce predictable outcomes for top-tier corporations in over 20 countries. Through on-site, on-shore and its trademarked Global Nearshore™ service delivery models, Softtek teams with CIOs to constantly increase the business value of IT. Softtek is the creator and leader of the nearshore industry. Visit www.softtek.com, follow @Softtek, connect with Softtek on LinkedIn and read Softtek’s blog.

About Systech Integrators, Inc.®:
Systech Integrators, Inc. is a global IT solutions and services company. Systech offers end-to-end solutions and services in support of SAP applications, including implementation, business consulting, hosting (e.g., SaaS, cloud and traditional), application management services and qualified SAP Business All-in-One partner solutions. For more information, visit http://www.systechi.com/. SAP and all SAP logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries. All other product and service names mentioned are the trademarks of their respective companies.

SAP Forward-looking Statement
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Words such as “anticipate,” “believe,” “estimate,” “expect,” “forecast,” “intend,” “may,” “plan,” “project,” “predict,” “should” and “will” and similar expressions as they relate to SAP are intended to identify such forward-looking statements. SAP undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations The factors that could affect SAP's future financial results are discussed more fully in SAP's filings with the U.S. Securities and Exchange Commission ("SEC"), including SAP's most recent Annual Report on Form 20-F filed with the SEC. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. For more information, contact:

For more information, contact:

Karen Liedl
Marketing Communications Manager
Softtek
karen.liedl@softtek.com
+1 763-291-1464

Radha Ahlstrom-Vij
Gutenberg Communications
radha@gutenbergpr.com
+1 212-239-8741

Single Source IT Contracts Come Back into Vogue in 2013

Mon, 21 Jan 2013 15:45:16 +0000

Nearshore Outsourcing

Clay Browne

The trend of the last few years toward the use of multiple outsourcing suppliers in the IT industry is growing long in the tooth, and the pendulum has begun a strong swing back toward single-source IT contracts in 2013, at least according to the IT analysts at Ovum. They contend that businesses have not seen the expected synergies from multi-sourcing, largely due to the difficulties of internal project management control leading to scope creep and increased costs.

Ovum's recently released report "2013 Trends to Watch: Bundled Outsourcing" points out that international outsourcing contract lengths are gradually lengthening as well, with the average contract topping four years for the first time. The length of the average outsourcing contract in the insurance industry is up to almost seven years. The report also mentions that outsourcing contract sizes are increasing, with contracts averaging over $72 million in the fourth quarter of 2012.

Image by U.S. Embassy, Manila, Philippines

Single-Source Outsourcing Helps Focus on Strategic Goals

According to Jens Butler, principal analyst, IT services at Ovum, it boils down to the growing recognition that, despite the need for agility and the importance of the success of current IT projects, unless companies carefully lay the infrastructural groundwork for transformational projects first, they will not be able to meet their strategic goals.

Butler continues to say this trend away from multi-sourcing is really not surprising. "This is a trend that has been building for some time. In the mid-noughties there was a preference for using multiple best-of-breed suppliers, but for many the reality was an associated loss of control. Too often the right hand didn't know what the left was doing."

Relationships with Single-Source Providers Often Lead to Productive Partnerships

Ovum's report emphasizes that larger organizations are looking for productive long-term relationships with providers. CEOs, CIOs and CTOs want to know that the same hands are going to be on the steering wheel in three, four, five years when their long-term IT build-out plans come to fruition. According to their survey data, "the desire for stability and control, which is being led by the government sector, now ranks as a number two priority, up from four or five out of 10."

Consumers Energy , a mid-size utility company based in Jackson, Michigan, who recently signed a major partnership agreement to develop a technology center with a well-known Indian IT services provider, is a good example of the trend. Consumers Energy wanted to take advantage of the recent significant breakthroughs in big data processing and analytics to improve system monitoring and refine energy usage prediction, but their IT staff was swamped, and it is very difficult to hire top-quality IT specialists in Michigan right now due to GM moving most of its IT operations in-house.

After negotiating with 10 vendors and considering multi-sourcing, Consumers Energy decided to go with a single-source deal that included a commitment from the provider to build a technology development center in Michigan. This technology center will initially employ about 100 people, with plans for employment to grow to more than 400 and serve other local companies as their IT needs ramp up over the next few years.

Mamatha Chamarthi, CIO of Consumers Energy, explains the company's position. "We didn't look at this from a political angle," she says. "We thought: What are our core values? Our core values are to invest in Michigan."

Softtek VP of marketing & communications comments on high tech worker shortage, in CNBC article

Mon, 21 Jan 2013 00:00:00 +0000

Softtek VP of marketing & communications comments on high tech worker shortage, in CNBC article

Brazil, Argentina, And Mexico: Attractive Offshore Locations?

Thu, 17 Jan 2013 00:00:00 +0000

Forrester Blogs - Mexico’s geographic proximity to the US, membership of NAFTA, a strong and improving economy, plus a greater export orientation among service providers makes it a prime nearshore location for US companies. Neoris and Softtek for instance are two providers offering strong choices in SAP services.

2013 Software Industry Trends

Thu, 10 Jan 2013 18:44:31 +0000

The Process of Creating

Clay Browne

North America will lead the way in global software sales in 2013, with Europe lagging and emerging countries continuing their relatively rapid growth, according to IT consultancy Gartner. These projections are based on Gartner’s latest survey data, presented in a webinar on January 8 (IT Spending Forecast, 4Q 2012 Update: 2013 – The Year Ahead), where they discuss the latest IT industry spending results and projections based on their surveys of the major players in the sector.

Image by Official GDC.

Global IT Spending

Let’s get an overview on the sector by taking a quick look at global IT spending trends. Global IT spending only increased by 1.2% in 2012. While that is a disappointing performance, it has to be tempered with the knowledge that IT spending increased by a robust 7.9% in 2011, and that 2012 growth has been significantly impacted by troubling uncertainties about growth worldwide.

The good news is that 2013 IT spending is expected to bounce back in a big way, with Gartner projecting a 4.2% increase for the year. Gartner does, however, hedge their bets, saying that continued economic uncertainty would likely significantly slow growth in spending. They also expect a relatively slow first half, but anticipate IT spending to pick up a good bit in the latter part of the year.

2013 Software Industry Projections

Gartner projects a solid 6.4% growth in the software industry in 2013, with total industry revenues approaching $300 billion ($296 billion). This brings the overall three-year growth rate for the software industry from 2011 to 2013 to 6.8%. Gartner also expects continued future growth in the industry, anticipating software industry revenues will grow to $360 billion by 2016.

Small and medium-sized businesses are projected to lead the way, spending 7.1% percent more on software in 2013, but larger businesses are not far behind with increased software budgets of around 6%.

Trends in Emerging and Mature Markets

The growth rates for software spending in emerging markets remains high, nearly double the growth rates for mature economies, at 11.9 % compared to 5.8%. The main reason for this is that companies in emerging markets are still buying a great deal of ‘foundational” software required to run a business – ERP software, payroll, accounting, database management software, etc., whereas companies in mature markets already have these products. The top growth drivers in mature economies are expected to be security, CRM and storage management products.

One other trend of note is that software spending is expected to increase much faster in North America than in Europe in 2013. Gartner projects greater than 7% growth in North America, while only around 3% in mature Europe.

On a more general and eye-opening note, Gartner analyst Kathy Hale also pointed out that one of the major reasons that emerging countries have relatively low IT spending rates is lack of transparency. According to Hale, it boils down to the fact providing IT services requires a “relatively intimate” relationship between vendor and client, and for cultural and practical purposes, that type of close relationship is simply not possible in many emerging countries. That said, some sectors of the IT industry will continue rapid growth in emerging economies. For example, Gartner projects that emerging economies will grow from 11.4% of total software industry revenues in 2012 to 13.1% in 2016.

Responding to Stagnant IT Spending

Tue, 08 Jan 2013 14:23:10 +0000

The Process of Creating

Dan Berthiaume

Despite an expected 2.5% increase at the median in the IT operational budgets of North American companies during 2013, those companies are not expected to make any significant increases in their capital budgets or headcount in the coming year. These are the main findings of a new report from research firm Computer Economics, “Outlook for IT Spending and Staffing in 2013.”

North American IT capital spending is only expected to rise an anemic 0.3% at the media during 2013. Nervousness among North American companies about uncertainties across the globe, including domestic budget deficit negotiations, ongoing recession in Europe and uncertainty about the Chinese economy, is reining in capital spending. Most IT capital spending that does occur this year is expected to focus on less costly and time-expensive software upgrades as opposed to more complex software upgrades.

During 2012, North American IT capital spending and IT hiring experienced healthy growth. In addition to stagnant capital spending, the North American IT community is also expected to maintain 2012 headcount levels, with average salary increases for IT employees ranging from 2-3%.

Looking at the one area where some spending increases are expected, Computer Economics predicts that cloud computing will be the area where most North American IT organizations dedicate increased IT operational spending. IT executives are also expected to investigate outsourcing as a means of improving agility and lowering costs, with possible increases in desktop support and help desk outsourcing.

Of course, predicting the future is always a dicey proposition. Computer Economics does note that if the US economy picks up, capital spending budgets could wind up growing and IT organizations could take on more permanent workers. On the other hand, if the US economic recovery weakens, there remains room for budget reductions, including a scaling back of expected growth in operational spending, which could slow down rapid expansion of cloud computing among North American business users.

So what should CIOs take away from this less than encouraging news? Following the crowd is not always the best tactic, but in this situation it appears that cloud computing and outsourcing can both offer cash-strapped IT organizations a way to improve performance while reducing costs. Cloud computing can incur significant upfront costs but produces significant longer-term savings in areas such as reduced overhead, elimination of unnecessary bandwidth and faster processing.

Likewise, outsourcing brings with it some inevitable transition costs but usually offers substantial labor arbitrage and can also produce a reduced need for overhead. Furthermore, outsourcing of lower-level tasks frees up employees to perform higher-level functions and may allow workforce reductions, while outsourcing of higher-level tasks avoids the need to hire new (and expensive) expert employees. 2013 may be a tough year for IT budgets, but the right response will allow smart and tough enterprises to survive and even thrive.

CEO of Softtek USA & Canada Named to Hispanic IT Executive Council's prestigious "HITEC 100" List

Thu, 29 Nov 2012 00:00:00 +0000

Melodika.net - Of his award, Marcos said, "I am thrilled to receive this honor from HITEC and am humbled by the accomplishments of my fellow honorees. This award gives testament to Softtek's strong team-oriented culture, which enables all of our associates to succeed."

CEO of Softtek USA & Canada Named to Hispanic IT Executive Council’s prestigious “HITEC 100” List

Mon, 26 Nov 2012 00:00:00 +0000

CEO of Softtek USA & Canada Named to Hispanic IT Executive Council’s prestigious “HITEC 100” List

NEW YORK, NY & MONTERREY, MEXICO –November 26, 2012 – Softtek, founder of the nearshore industry and leading global IT services provider dedicated to maximizing the business value of applications, announced that the company’s CEO for USA and Canada, Marcos Jimenez, has been named to the Hispanic Information Technology Executive Council (HITEC)’s prestigious HITEC 100 list.

HITEC is a premiere global executive leadership organization of senior business and IT executives. Since 2008, HITEC has compiled a comprehensive list featuring the top 100 most influential and notable Hispanic Professionals in the Information Technology Industry called the "HITEC 100.” Marcos joins this accomplished list of professionals.

Throughout his 19-year career with Softtek, Marcos has brought a unique and strategy-driven perspective to the nearshore IT industry. Starting his career as a programmer in 1992, he rose quickly to become an essential part of Softtek’s core leadership team. He is also responsible for building a world-class recruiting and training program, which has provided the company competitive professionals and has trained highly sought after IT talent for the region over the past ten years. Marcos has been a significant influence in providing value through bringing creative, world-class solutions to Softtek’s clients, while at the same time generating thousands of jobs in the U.S. and Mexico.

Of his award, Marcos said, “I am thrilled to receive this honor from HITEC and am humbled by the accomplishments of my fellow honorees. This award gives testament to Softtek’s strong team-oriented culture, which enables all of our associates to succeed.”

For more information on Softtek and the IT industry, visit Softtek’s blog (http://nearshore.com/) or follow @Softtek on Twitter. To connect with Marcos on LinkedIn, click here.

About Softtek:
Founded in 1982, Softtek is a global provider of process-driven IT services with more 30 offices in North America, Latin America, Europe and Asia. With nine Global Delivery Centers in Mexico, China, Brazil, Argentina and Spain, Softtek helps improve time-to-business-solution, lower costs of existing applications, deliver better engineered and tested applications, and produce predictable outcomes for top-tier corporations in over 20 countries. Through on-site, on-shore and its trademarked Global Nearshore™ service delivery models, Softtek teams with CIOs to constantly increase the business value of IT. Softtek is the creator and leader of the nearshore industry. Visit www.softtek.com, follow @Softtek, connect with Softtek on LinkedIn and read Softtek’s blog.

About HITEC:
The Hispanic IT Executive Council (HITEC) is a premiere global executive leadership organization of senior business and IT executives who have built outstanding careers in information technology. HITEC’s premiere network spans the Americas and is focused on building stronger technology and executive leaders, leadership teams, corporations, and role models in a rapidly changing, flatter, and information technology centric world. These global leaders include executives leading Global 1000 corporations while others lead some of the largest Hispanic-owned IT firms across the Americas.

For more information, contact:

Radha Ahlstrom-Vij
Gutenberg Communications
radha@gutenbergpr.com
+1 212-239-8741

World Congress on IT (WCIT) 2012

Mon, 22 Oct 2012 00:00:00 +0000

World Information Technology & Service Alliances (WITSA) >> Montreal, Canada

More information at: http://bit.ly/M5Ae3T

Gartner Symposium/ITxpo 2012

Sun, 21 Oct 2012 00:00:00 +0000

Gartner >> Orlando, FL

More information at: http://bit.ly/xNNoUl

Getting IT on the Right Side of Value

Fri, 28 Sep 2012 00:00:00 +0000

CIO Update / Guest Marcos Jimenez - Indeed, the world has changed. In a 2011 survey for CIOs conducted by the Gartner-Forbes Board of Directors, results revealed that pressure is mounting for IT performance. Approximately two thirds of respondents reported having “high” expectations for the strategic business value contribution of IT -- more than double the results from the previous year. Yet 67 percent of new IT projects are unsuccessful, according to a 2010 report by the Standish Group Chaos Report.

Latin American CIOs See Unique Value in Microsoft Dynamics CRM Integration via Azure

Tue, 18 Sep 2012 00:00:00 +0000

MSDynamicsworld.com - Softtek has seen a demand by its Latin American clients to look to the cloud, and specifically Windows Azure, for ways to integrate disparate systems, including Dynamics CRM. According to Warren Ross, Global Director of Cloud Services for Softtek, they have made use of the Azure AppFabric Service Bus technology to provide connectivity beyond the firewall. "That Dynamic CRM pipeline, all those events and transactions, connect to the service bus and it enables data that's been processed as part of the CRM".

Softtek Adds Microsoft Solutions to Cloud Center of Excellence

Mon, 10 Sep 2012 00:00:00 +0000

Business Wire - “Our growing relationship with Microsoft has resulted in the first sizeable Latin American Cloud Center of Excellence, which, in turn, will address a growing senior talent gap throughout the region,” said Warren Ross, Global Director of Cloud Services, for Softtek. “While we have been active in the cloud space for years, we now see an opportunity to bridge the services gap in cloud strategy execution, where analysts predict growth exceeding 300% over the next three years.”

Softtek é a primeira empresa mexicana a receber o “Microsoft Circle Azure Partner of the Year 2012”

Wed, 05 Sep 2012 00:00:00 +0000

IT Web - “Estamos orgulhosos em recebermos este reconhecimento que atesta que a Softtek tem desenvolvido capacidades para entregar um serviço “end-to-end” que permite levar nossos clientes para a nuvem, por meio do desenvolvimento de aplicações sobre a plataforma Azure, seja ele público, privado ou híbrido”, diz José Angel Arias, diretor global de Arquitetura de Negócios da Softtek.

Softtek, first Mexican firm to receive the 2012 Microsoft Azure Circle Partner of the Year Award

Mon, 03 Sep 2012 00:00:00 +0000

Softtek, first Mexican firm to receive the 2012 Microsoft Azure Circle Partner of the Year Award

Through this award Microsoft Corporation recognizes the best Partners of the National System Integrator (NSI) program for their extraordinary work in facilitating the Windows Azure practice.

MONTERREY, Mexico – September 4, 2012 – Softtek, founder of the nearshore industry and leading global IT services provider dedicated to maximizing the business value of applications, announced today that it has received the 2012 "Microsoft Circle Azure Partner of the Year" (Latin American region), awarded by Microsoft Corporation's World Wide National Integrator (NSI) Corp Team, for the successful sale and implementation of significant projects both in Mexico and in the United States.

This is the first time that Microsoft Corporation has delivered the annual recognition to a Mexican firm. The award is given to the company in each region of the world that has stood out most as business partner in the NSI program within Microsoft's Azure platform.

"We are proud to have received this recognition, which recognizes our capabilities to bring our clients to the cloud, whether it be public, private or hybrid, through application development in the Azure platform," said Jose Angel Arias, global director of business architecture for Softtek.

Windows Azure is a cloud platform that enables users to compile, implement and administer applications, in a global network of data centers run by Microsoft. This technology can compile applications in any language, tool or framework, as well as integrate public cloud applications within the existing IT environment.

"The combination of Softtek's experience in delivering end-to-end solutions and Microsoft's platform to enable cloud services translates to a differentiated offering for our joint customers by enabling us to offer the best options to support their business needs while they save on operational costs, capture market more quickly, and increase their profitability. This represents a very successful formula based on a joint business plan to propose solutions that address the issues of greatest impact for our shared customers," said Patricia Osorio, Director of NSI Partnerships for Microsoft Latin America.

This distinction endorses Softtek as one of the industry's best NSI partners, able to successfully implement solutions in the Windows Azure platform. It also identifies the company as a solid provider, thanks to Softtek's significant number of experts who are focused on the development, migration, modernization and maintenance of cloud-based applications in the U.S., Mexico and greater Latin America.

The abilities to innovate, differentiate and deliver customer value are also criteria used during the selection process for this award.

About Softtek:
Founded in 1982, Softtek is a global provider of process-driven IT services with more 30 offices in North America, Latin America, Europe and Asia. With nine Global Delivery Centers in Mexico, China, Brazil, Argentina and Spain, Softtek helps improve time-to-business-solution, lower costs of existing applications, deliver better engineered and tested applications, and produce predictable outcomes for top-tier corporations in over 20 countries. Through on-site, on-shore and its trademarked Global Nearshore™ service delivery models, Softtek teams with CIOs to constantly increase the business value of IT. Softtek is the creator and leader of the nearshore industry. Visit www.softtek.com, follow @Softtek, connect with Softtek on LinkedIn and read Softtek's blog.

About Microsoft:
Founded in 1975, Microsoft (Nasdaq "MSFT") is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

For more information, contact:

Alejandro Camino
Softtek
acamino@softtek.com
+1 917-536-0010

Gilberto Romero
Softtek
gilberto.romero@softtek.com
+52 55-5026-5015

Softtek acquires SCAi, US subsidiary

Fri, 24 Aug 2012 00:00:00 +0000

Business News Americas - With over 20 years in the market, SCAI is SAP partner for more than 13 years and has reportedly delivered more than 100 successful projects with the platform in Mexico, US and Europe. With the acquisition, SCAi and its staff will be incorporated into Softtek, with the goal of increasing the latter's intellectual property through five SAP solutions: JIT Supplier Automotive, LAB Pharma, Metal, PCare and Chem.

El software local crece pese a los costos

Thu, 23 Aug 2012 00:00:00 +0000

Revista Fortuna - "En la Argentina hemos crecido mucho como socios tecnológicos de SAP, pero también por habernos especializado en distintas industrias a las que les ofrecemos un amplio portafolio de servicios. Hay segmentos, como el financiero donde nos hemos fortalecido, al igual que en la industria automotriz, y el software propiamente dicho”, explica Alejandro Camino, vicepresidente de marketing y comunicación de Softtek.

Treading Carefully with the Insourcing Option

Thu, 16 Aug 2012 15:19:05 +0000

Nearshore Outsourcing

Dan Berthiaume

“Insourcing,” or bringing work based offshore back to the US, has been receiving increased attention recently. Politicians in both parties have made outsourcing a hot-button campaign issue,
and as domestic wages and operating costs have dropped during the economic crisis of the past few years, the cost advantage of outsourcing does not seem quite as dramatic.

However, as demonstrated in a new white paper from sourcing advisory group Alsbridge, “Insourcing 2012 – Pros, Cons and 10 Things to Consider,” the decision to insource is not one to be made lightly or quickly. Even if an outsourcing buyer can identify specific benefits such as cost savings or improved public image, insourcing is an expensive, time-intensive process that can have disastrous results if not performed properly. Let’s take a quick review of Alsbridge’s advice to prospective insourcers.

Assessing the Situation
Alsbridge recommends companies considering insourcing assess factors such as why in-house IT processes were originally outsourced, whether an outsourcing provider is willing/able to restructure and/or reprice an existing agreement, the full slate of risks (including possible changes in business direction during transition and in-house knowledge gaps), readiness to fully manage IT operations, and capability to rehire outsourced staff.

Looking more closely at some of these factors, it becomes apparent that insourcing involves a lot more than canceling or declining to renew a contract and restarting IT operations in-house. For example, outsourcing IT is not something companies do for the fun of it. Generally IT is outsourced due to some sort of problem with properly managing processes in-house. And even if IT was outsourced solely due to cost issues and now the price of talent and equipment is lower, even the most pessimistic observers do not expect the current recession to last forever. Companies that insource due to current low operational costs may find themselves facing high operational costs again within a year or two.

Also, most outsourcing providers are reasonable companies that understand sometimes circumstances change and agreements need to be modified. It is definitely worth it for a company considering insourcing to sit down with their ITO provider and discuss the reasons they many want to bring IT operations in-house. It is very possible the provider will work to accommodate their issues and maintain the outsourcing relationship.

And as Alsbridge points out, insourcing requires a full risk assessment that goes beyond obvious “front of mind” risks and also requires readiness to manage IT in-house. That requires implementing and maintaining an in-house IT platform and data center, hiring technical and managerial staff with specific IT expertise, and also managing a whole new set of IT vendor and maintenance contracts. While rehiring outsourced staff with this knowledge base can greatly ease these burdens, insourcing companies will need to check their contract termination language to see if it is permissible and even then, there is no guarantee outsourced employees will want to return.

Selective Insourcing
So insourcing is a complex, multifaceted task involving many challenges. And when a company is nearshoring IT processes, the benefits of insourcing become even smaller as nearshoring offers added value in terms of time zone and cultural similarities, relatively strong English capabilities, etc. However, as Alsbridge suggests, the best route for companies who are considering bringing outsourced IT activities back in-house is to “selectively insource.”

That is, if the skillsets and supporting architecture for certain processes are readily available, it may make sense to include insourcing them as part of a broader multi-sourcing strategy. And in some cases, insourcing most or all of outsourced IT processes will prove the best option. But an insourcing decision should only be made after careful and thorough review of all the mitigating factors, and always driven by internal needs and not in response to fluid external situations such as exchange rates or political opinions.