Even IT legal work is headed offshore
Legal services for IT contracting may be the next function to move offshore, according to an attorney whose boutique technology law firm is engaged in setting up a service in India.
“IT contracts are integrally related to IT, and I have found that I am preaching to the choir when I discuss this cost-saving initiative with CIOs who have experienced the benefits of offshoring,” says Larry Thomas, a partner at Thomas & Opp PA in Minneapolis.
Services would include a majority of the work involved in drawing up contracts for the purchase of software and hardware, as well as agreements for consulting, application service providers, software development and, yes, even outsourcing.
Thomas plans to train Indian MBAs and technical workers in all aspects of IT contracting and have them do the bulk of the work at a fraction of the cost of a well-trained U.S. paralegal, with high-priced attorneys merely reviewing and fine-tuning the work. Quality and turnaround time will improve, and costs can be cut by at least 50 per cent, compared with internal contracting operations, he says.
The concept is already being tested at General Electric Co., where a captive company in India has been handling various procurement functions, including, most recently, IT contracting. But GE spokesman Peter Stack says the process of offshoring IT legal work is still in the experimental stage, and he wouldn’t comment on the success of the effort.
— Kathleen Melymuka
Selling to the CIO
Everyone knows the No. 1 rule for selling IT stuff is to understand the CIO’s problems and try to solve them — right? CIOs say enterprise software salespeople know their own products, but less than 15 per cent of the sellers are rated as excellent at understanding the buyer’s requirements and needs, according to a study by analysts at Stratagem Marketing Inc. in Herndon, Va.
Another key factor in making the sale is CIO confidence that the vendor will support the product afterward, Stratagem says. As Eric Goldfarb, CIO at Atlanta-based PRG-Schultz International Inc., recently put it in an online essay, “Over the course of implementing products or software, something’s bound to break. The salesperson who stands by me over the years and doesn’t run away at the first sign of trouble is going to be successful.”
Benchmarking, in which companies compare themselves against their role models, is essentially a quest to find the best practices for a particular business process. These are the most commonly benchmarked functions:
1. Information systems
2. Customer service/satisfaction
3. Employee development/training
4. Human resources
5. Knowledge management
Source: The Benchmarking Exchange, Aptos, Calif., May 2004
The IT economy
— Canadian IT spending will grow three per cent this year, led by government spending, according to Forrester Research Inc. The slower Canadian economic recovery means that IT spending growth will lag that of the U.S. by one or two quarters. Canadian government spending is strong because of e-government initiatives and the replacement of antiquated systems, Forrester says.
— Spending on offshore business process outsourcing is expected to reach US$3 billion this year, a 65 per cent increase from the 2003 total of US$1.3 billion, according to Gartner.
Retail e-commerce growth rate
Retail e-commerce still amounts to only 1.9 per cent of overall U.S. retail spending. But online sales are growing faster than total sales.
Source: U.S. Department of Commerce, May 2004