| |
| Thought Paper |
| |
Leveraging Six Sigma in IT |
| |
| Abstract |
The International Data Corporation (IDC) predicted that the worldwide outsourcing market would
grow from $100 billion in 1998 to $151 billion in 2003, with a compound annual growth rate (CAGR)
of 12.2 percent.
The 1990s witnessed a massive spurt in service outsourcing, particularly in the IT services sector.
Over 60% of the Fortune 500 companies, located in Europe and America are outsourcing their IT
operations offshore to developing economies like Asia, Africa, the Carribean and Latin America with
a view to achieve cost reduction. The primary contributor to cost reduction was the wage disparity
between outsourcing companies and the service providers. This first phase of outsourcing
leveraging wage arbitrage is towards completion -with a large chunk of cost reduction potential being realized.
Today, outsourcing companies , have identified quality and productivity as the key differentiators in evaluating service providers. These parameters are of prime importance since most software solutions have relatively small payback periods. Service providers also bring complementary knowledge, ideas, and business methodologies, and enable outsourcing companies to concentrate on core competencies. These benefits in addition to cost reduction are turning the tide in favour of outsourcing.
It is difficult to leverage these benefits in the absence of a defined set of tools and techniques.
Application of process improvement techniques like Six Sigma can help realize these benefits.
This paper examines the application of Six Sigma to the IT services industry holistically.
|
