l When Farmers Insurance CIO Cecilia Claudio told her staff that she was handing much of their workload to Wipro Technologies, a fast-growing outsourcing firm in India, few believed her motives. Claudio insisted that she wanted to tap lower-cost labor in India to handle mundane maintenance functions so her own staff could focus on more exciting Java and Web-based initiatives.

"I had to convince them that I wasn't bringing these people in to eliminate their jobs," Claudio says. With labor costs about half of Farmers' in-house expenses, her staff was concerned she would replace them. It took about six months to a year before the IT staff was convinced that Claudio was holding true to her word. Now, instead of having to sell employees on Wipro, Claudio says, "my staff recognizes the value of outsourcing. The managers now come up with tasks they want to outsource to India."

One of the biggest challenges facing a manager who brings in an outsourcing firm is to build trust and communication between the outsiders and staffers. That gets particularly sticky when the outsourcing is overseas. InformationWeek Research's Analyzing The Outsourcers survey didn't rank any Indian firms in its top nine, but those companies are a growing outsourcing power. While many have focused on project-oriented application development, they're grabbing more contracts to handle ongoing business processes such as Web transactions or E-mail management.

But the challenge of blending outsourcing staff exists for work done by U.S. companies as well. After 12 years in an outsourcing relationship, Continental Airlines Inc. CIO and senior VP Janet Wejman says internal staff and EDS employees have started working as a team. But it takes constant effort. "If anybody comes to you and says, 'It's that bad EDS or that bad Continental,' management at both companies have to say, 'Wait a minute. It's both of your problems.'"

7-Eleven Inc. used to have what CIO Keith Morrow describes as a segregated approach. The company treated outsourcing and internal staff differently. "I've tried to eliminate that as much as possible," Morrow says. How? He shares 7-Eleven's corporate goals and strategies with outsourcers so they feel part of the company's success. He also creates goals and metrics that include all IT personnel -- whether 7-Eleven or one of the outsourcing vendors signs their paychecks.

Return to main story, "Analyzing The Outsourcers.