Outsourcing

Outsourcing fatigue: Why CIOs have gone from fans to fed up

Steve Ranger's Notebook: Three reasons IT chiefs worry about outsourcing - and a silver lining...

Outsourcing has been a staple of corporate strategy for years, but CIOs may be getting weary of it - and wary of its consequences, says silicon.com editor Steve Ranger.

Outsourcing has long been a standard component of business strategy, a popular choice for firms keen to get rid of tech infrastructure that provides little competitive advantage.

The idea is that outsourcers - with their scale and greater experience - can deliver IT as a service more efficiently and cheaply than their customers ever could through having their own IT staff. Add in offshore support and the cost savings really start to pile up, so the argument goes.

It's persuasive and the idea of getting someone to take away the complications of owning and running IT, and replacing it with a predictable cost for a service, has been highly attractive to boards - and CIOs - for years.

CIO and staff

CIOs worry about what outsourcing - and particularly offshoring - means for the longer term health of the UK IT industryPhoto: Shutterstock

A significant proportion of outsourcing has been about two things: cutting costs, and offloading a problem - for example, an IT department loaded with expensive staff serving a creaky, ageing tech infrastructure.

It's rarely about innovation. I've seen very few companies bragging about how their IT outsourcing strategy has cost more than doing it inhouse, and still being happy with the additional cost because it's boosted their capacity for innovation. But perhaps I just missed that case study.

And maybe it's because the narrow focus of outsourcing has been on cutting costs and offloading problems that I've been picking up on a lot of outsourcing fatigue among the CIOs I've been talking to.

Perhaps this is from a small sample, but I hear CIOs and IT directors expressing doubts about the wisdom of outsourcing, on a number of levels.

Now, such reservations aren't new in themselves but rarely have I heard so many CIOs and IT directors sounding so uncomfortable about such a key element of business strategy.

First, they complain that it doesn't always work. As soon as you announce outsourcing plans, you lose your best people, who don't want to stick around for all the pain and uncertainty of the restructuring. And when the outsourcing deal is done, outsourced workers and their new managers are far less loyal and no longer willing to go that extra mile for your business. Those attitudes make IT innovation far harder.

Secondly, at a more personal level these CIOs argue that outsourcing often means...

About

Steve Ranger is the UK editor of TechRepublic, and has been writing about the impact of technology on people, business and culture for more than a decade. Before joining TechRepublic he was the editor of silicon.com.

0 comments

Editor's Picks