The Jet Infosystems company provides IT outsourcing services for more than 20 years and has one of the largest service centers in Russia and the CIS. How customer’s view of IT outsourcing is changing and what main tasks banks solve in cooperation with service providers, told Alexey UCHAMPRIN, the deputy director of the Technical center of the Jet Infosystems company. 

NBJ: What trends in IT outsourcing evolution do you see today?

A. UCHAMPRIN: Three main trends occures. First, more often business sub-dividings, and not just IT depertments of organization become customers of IT outsourcing services.. It doesn't mean that service provider forces out internal IT department, – just there is a redistribution of zones of responsibility. 

Secondly, interest in complex IT outsourcing when the whole service, for example, a banking system or webshop is transferred to external service is growing. In this case the outsourcer totally is responsible for smooth operation and development of all complex – from an application software to IT infrastructure.

Thirdly, change motives of the customers. Until recently resort to IT outsourcing was used to reduce administrative efforts to solve hard routine tasks, or because of lackof own relevant expertise. Today we more and more often see cases when companies use business strategy of outsourcing the processes which don’t participate in value added chains.

NBJ: How changes the role of IT division in the company and how do business feel about changes?

A. UCHAMPRIN: Modern business goes digital actively, and IT solutions become more available and cheaper. These two trends also define position of IT division in the company. 

The modern IT service has to pass from a back office to front office and to act as full partner of business division: to plunge into strategic decision-making, to work out the ideas for business. It is expedient to outsource routine functions which demand considerable temporary and financial resources. And business, including banking, follows the same path.

What does it give? First of all, own IT division becomes one of significant drivers of strategic development of the company. Besides, performance of all operations which aren't demanding unique knowledge of business of the organization is assigned to the outsourcer and is carried out according to predetermined quality indicators within the predictable budget and with the predetermined responsibility.

NBJ: Quite often there are disputes on what has to be a penalty for violation of indicators of quality.

A. UCHAMPRIN: There are the customer's dreams, and there are possibilities of the supplier. According to established practices responsibility of outsourcer for violation of quality indicators often reaches 100% of the cost of his services for the reporting period. In a case with large customers it is already impressive sums. Of course, the customer wants more: for example, that the outsourcer offset the real and indirect loss (and sometimes the missed profit) caused by idle time of this or that service. Such options are possible too, but are considered every time separately and, as a rule, depend on partnership level between the companies.

NBJ: What problems banks solve with the helpof IT outsourcing?

A. UCHAMPRIN: The most various– depending on requirements. An example is our interaction with Pochta Bank (former Leto Bank) which by means of IT outsourcing solves two problems. The first is operation of centralized IT infrastructure placed in several commercial data-centers. The second – support and development of the branch network including hundreds of offices and thousands of sales outlets. IT outsourcing allowed bank not to build its own large IT service focused only on supporting function: only one person is responsible for support and development of a branch network in the bank. Besides problems of development and modernization of IT infrastructure of regional divisions, the customer has given us to outsourcing all incident management process of in this area– from registration to solving.

There are banks, which can be called IT companies, for example Tinkoff Bank. There is a question: why they need IT outsourcing? Nevertheless among our customers there are also electronic banks. The matter is that their internal IT division, in fact, is the strategic business driver and is engaged in creation of hi-tech services which considerably increase competitive advantages of the company and make for it real profit. And problems of creation of IT infrastructure and ensuring its availability are transferred to the external supplier of IT services.

NBJ: How your approach to rendering of services of IT outsourcing corresponds to needs of customers?

A. UCHAMPRIN: In our briefcase of services there is all types of outsourcing demanded today. We provide to customers from IT departments infrastructure services. We can offer bank with the distributed branch network operation of a branch network and IT processes. Moreover, we provide services of complex IT outsourcing. For example, the LIKARD company (PJSC Lukoil subsidiary) supporting loyalty cards transferred us to outsourcing operation of system of loyalty – mission critical of the decision. And we were engaged in its development and now we provide development of an application software. In this case the customer is saved from the constant conflict between developers and service of operation. And we as uniform center of responsibility, we observe all requirements regarding development of system and withstand rigid SLA on operation (time of recovery of critical services – no more than 30 minutes).

Also we realize outsourcing of support of an e-commerce shop of M.Video. The online site generates about 10% of a turn of the retailer therefore the stop of its operation even for an hour attracts losses in several hundred million rubles. We completely are responsible for smooth operation of the web shop – from the application layer to IT infrastructure (there are more than 80 servers).

NBJ: What key advantages complex IT outsourcing gives to customers?

A. UCHAMPRIN: First of all it means access to all competences of the outsourcer, the predictable quality of service stated in the contract and flexible increase or reduction of volume of services with consumption payment after delivery.

We had a case when the customer hasn't quite correctly applied multisorsing ideology. He has given operation of infrastructure to us, and support of the business applications functioning on this infrastructure – to other provider. There was quite typical problem with business application productivity, and a trace – questions who is guilty and why has so occurred? And though our company was responsible only for infrastructure, we, having at the order the widest range of competences in all IT directions, have established and have fixed the reason problems. As a result the customer has preferred to work with us by the principle of complex outsourcing.

NBJ: How IT outsourcing is urgent for the banking sector today?

A. UCHAMPRIN: For survival to any business, including bank, it is necessary to be flexible, it is necessary to surprise – to think out and offer new services to clients. And in case of failure it is necessary to be able to return on initial positions as fast as possible with the minimum monetary losses. It has caused distribution of techniques like agile. Outsourcing is one of tools which gives to business the chance to realize this flexibility and to work in the agile mode.

IT outsourcing allows passing to service model: the customer can easily receive a necessary new resource and refuse that which became uninteresting, having paid only for time of the actual operation. For example, for one of retailers we for two days tore an IT landscape for SAP ERP. It was some kind of temporal polygon, the equivalent to a productive landscape (tens of servers and storage systems, the multi-terabyte database) at which the retailer trained several thousands of regional employees in operation with Enterprise resource planning (ERP-system). The decision of such task without the aid of outsourcing would pour out in huge ­financial expenses.

NBJ: And what about information security? Quite often customers are afraid to give the data outwards.

A. UCHAMPRIN: Unreliability of data storage is one of popular myths about outsourcing. But, first of all, data with which the organization operates are most often interesting to one person behind perimeter and to one hundred people in the company. Secondly, the outsourcer has, as a rule, incommensurably higher level of competences in IS in comparison with permanent members of staff. Thirdly, the IT outsourcing market is so close that any provider cares not only for SLA observance, but also for own reputation which he earns for years, and can lose in one day.

NBJ: There is an opinion that IT outsourcing is more expensive than insourcing. Is it myth too?

A. UCHAMPRIN: It is an ambiguous question. What expenses company has in a case with own IT specialist? It is a salary, taxes, an insurance, the cost of training. Plus to everything there has to be a personnel reserve in case of a holiday, a disease or dismissal of the employee. Do not forget about service level. If availability of system in the mode 24/7 and time of reaction to failure is important no more than 15 minutes, then it is impossible to provide such service by two regular experts. The customer can object that for his tasks such service level isn't necessary. But then it is necessary to request from an outsourcer the price of similar service – as a result it turns out that the cost of outsourcing and the cost of insourcing are comparable.

And now we will compare degree of responsibility for violation of SLA. The penalty designated in the contract with the outsourcer is incommensurable to possible financial responsibility of own employee (and in case of his dismissal the company will spend both additional time and money for the search of new staff ). 

So, if to consider all of nuances, outsourcing is often more favorable, than employment of permanent members of staff. And modern Chief information officers (CIO) understand it those who are more focused on business goals and already consider expenses of the company as a whole, not only the IT Department.