In the year 2000, the Information Technology industry reached an important milestone. For the first time, more than half (54%) of IT services purchased in America were outsourced. A surprising feature of outsourcing is that its momentum is continuing even after the red-hot economy of the millennium has simmered down. Gartner Group projects that by 2005 outsourcing will represent 59% of IT services.

Enterprises have discovered that it’s always a good time to outsource. As Gartner Group commented in a report published in December, 2001: During the economic boom, demand for business transformation and scarce IT skills drove outsourcing. The present economic decline has brought cost reduction back to the top of enterprise agendas, and outsourcing can provide this benefit.

Whether it involves designing network infrastructure, setting up a help desk, rolling out a new messaging system, or building an on-line business application, outsourcing can contain costs and risks, allowing IT service expenses to grow in a more linear fashion than is possible by building up an all-purpose in-house IT staff.

Encodex’s Outsourcing Model

Encodex has developed a dynamic outsourcing model that helps small companies solve their two biggest IT problems: cost containment and access to skilled personnel.
Better yet, the model is based on continuous knowledge transfer from Encodex to the client’s in-house staff so that advanced technology can quickly become a core competency.

Encodex focuses on Microsoft .NET enterprise servers, Internet-based wide area networking, virtual office technology, BackOffice, and service-driven help desks. These are all fields that are evolving too fast even for big companies to keep up. Encodex’s president Arun Joshi compares the firm's outsourcing model to the technique of drafting in team racing where the leader breaks down air resistance for a teammate. "We've geared up to provide access to people who operate at the cutting edge," says Arun. "Our engineers can absorb new technology quickly and use it to deliver solutions. By continually transferring knowledge and best practices to our clients, we enable them to keep up with the accelerating pace of information technology without exhausting their resources."

Of course, for this to work requires that Encodex and its clients stay closely in sync. This means breaking through the fundamental tension between client and Encodex staff.

"Everybody has seen bad consulting relationships," observes Arun. "The client's in-house staff naturally tries to protect their turf, and the consultant tries to create dependencies by being stingy with information. It's the old story of Not Invented Here vs. Job Security. When you've got two organizations pulling in different directions, you rarely end up where you're supposed to be headed."

The key to Encodex’s outsourcing model is that it keeps Encodex’s business goals in sync with the goals and needs of clients. "We invest heavily in our intellectual assets and information infrastructure," says Arun. "We recruit highly skilled and motivated people, provide them with what's probably the world's most sophisticated virtual office infrastructure, organize advanced and often custom tailored training from the major vendors, and offer lots of mechanisms that allow our entire staff to share information and experiences." The purpose of all this investment is to help Encodex deliver its basic products: best IT practices, high value services, and knowledge transfer. This in turn allows Encodex to satisfy its clients' primary motives for outsourcing: save time and money, access expertise, and enhance core in-house IT skills.

Anatomy of an Outsourcing Customer:

Clients who use Encodex for ongoing outsourcing typically have these traits in common:

• Small to medium size company or department (30 to 2000 users)
• Growing fast with limited IT resources
• Progressive view of information management
• Consider information technology as a strategic competitive resource

Among Encodex’s existing clients, the primary motives for outsourcing in general and using Encodex in particular boil down to three issues:

• Save time and money
• Have access to IT expertise
• Transferring core technology to in-house IT staff

Encodex has built an organization structured to respond to these requirements. A good way to understand the advantage of Encodex’s approach is to listen to past customers of the consulting firm, founded by Encodex’s president Arun Joshi, which played a major role in forming Encodex’s outsourcing model.