The IT Outsourcing Procedure provides guidance for managing the outsourcing of all of your company’s IT functions. The IT Outsourcing Procedure ensures that outsourcing affords the best overall solution to an IT problem by satisfying customer requirements while controlling costs and conforming to your company’s strategic goals and objectives. It may apply to any IT function or process. (12 page, 1927 words)

In the case of a first-time outsourcer, the outsourced function should present a minimal risk of failure to the company if it does not meet requirements or the outsourcer fails to live up to any of the Service Level Agreements in the contract. Responsibility for maintaining effective internal controls over financial reporting in conjunction with outsourced activities rests with the company’s chief financial officer, regardless of the company’s level of control over those outsourced activities.

IT Outsourcing Responsibilities:

Information Technology Managers are responsible for managing the outsourcing proposal process, administering outsourcing contracts, overseeing outsourced projects and reporting to Top Management on their status, maintaining relationships with outsourcers, and evaluating outsourced services. They should periodically meet with Top Management (at least annually) to review the company’s Information Technology Outsourcing agreements.

Financial Management is responsible for conducting the parts of the Due Diligence Investigation pertaining to financial matters.

Top Management is responsible for final approval of outsourcing contracts. Top Management should consist of the company’s chief executive officer and chief financial officer, at a minimum.

IT Outsourcing Definitions:

Outsourcer – An outsourcing vendor; a business entity providing necessary services to the company, allowing the company to lower operating costs and gain flexibility while gaining special expertise on an as-needed basis.

Outsourcing – Seeking services (resources) outside the company, typically to reduce costs, gain flexibility, and benefit from an outsourcer’s expertise with respect to a given function or process.

Service Level Agreement (SLA) – A binding contract, formally specifying or quantifying a customer’s expectations with regard to solutions and tolerances; a collection of service level requirements, negotiated and mutually agreed upon by the service provider and the consumer.