Outsourcing like the big boys.

• Author: Kurtz, Robert G.
• Position: New York Times Co.'s technology outsourcing - Includes related articles on technology services implemented or outsourced by newspaper company - Cover Story

After months of negotiating, The New York Times Company got the technology outsourcing services it needs - even though the firm's project is pocket change to many top vendors.

Lately it seems almost every major company wants to outsource information technology. In recent months, several multibillion dollar deals have made the news, including a $7-billion deal by DuPont and a $2.1-billion deal by J.P. Morgan.

At The New York Times Company, we recently completed several IT outsourcing deals for our companywide financial system, including the data center, the help desk for desktop computers, and network management. We also outsourced the IT data operations for the advertising and revenue functions of our regional newspaper group. All combined, the tab for these projects was less than $100 million - a fraction of the cost of the mega-deals.

So how in this age of billion-dollar projects can an organization with $150 million or less in IT outsourcing value get the attention and respect of the premier providers of information services? How can we get a deal that matches, in terms of cost and quality, those offered to the largest clients? And how can we get the ears of the vendors' senior executives?

The answer lies in developing an outsourcing strategy. It's a tedious endeavor, involving not only technology but personalities and corporate cultures. You need a great deal of fortitude to work through the issues. So here's a primer, based on my experiences, on how to get the best IT outsourcing deal at the right cost and with the least number of problems.

First, tackle the task of deciding what to outsource. Can you agree, as an organization, what you can entrust to an outside company and what you can't, no matter what? Although this seems easy to decide, usually it's not, because of internal differences of opinion.

At The Times Company, for example, many people were skeptical about moving some IT services outside the company. As a result, we limited the scope of what we outsourced and adopted a wait-and-see attitude. We decided to move incrementally, agreeing to start small, then add more, depending on how the first job went, then the second and so forth. But by starting with a limited scope, we lost some leverage we could have used during the selection and negotiation process to possibly get lower costs and better services.

Now that outsourcing is proving itself, we're considering outsourcing functions we never would have contemplated sending outside because we considered them core competencies we needed to control. We no longer view some things that way.

Next, think of your relationship with an IT outsourcer as a long-term affair, not one you can change whenever you want. This involves a bit of soul-searching. Do you really know your corporate culture? Many people think they do, but often an internal...