CXO

Training, not outsourcing, is key to success say CIOs

IT leaders who focus on training and retaining staff are generally more successful than those buying in talent from outsourcers, a global survey of more than 2,000 CIOs finds.

CIOs who focus on training staff to meet their skills' needs tend to run more successful IT operations than those who rely on buying in talent, a global study has found.

IT leaders who favour training and retaining staff reported completing a greater proportion of IT projects on budget and time, as well as greater range of business success than their peers, according to Gartner's 2013 CIO Agenda report, it's annual survey of more than 2,000 CIOs.

"When we compare CIO effectiveness, in terms of business and IT performance, the difference is the more effective ones emphasise building the internal talent pool over time," said Dave Aron, Gartner VP and fellow in the CIO Research Group.

"There's a real commitment to that as opposed to 'We'll just outsource or buy in or poach talent where we've got a talent issue'."

This internal development consisted of measures such as job rotations, training on the job, stretch tasks, shadowing and mentoring. Other effective techniques for holding onto or fostering the necessary skills internally were paying above average salaries and recruiting people from the business side of the organisation.

Aron said effective CIOs didn't look at outsourcing "as a way of solving the talent problem".

He said that while outsourcing can be effective for generic tasks, roles that require an understanding of a business' individual needs or whose responsibilities change frequently are better served by someone inside the organisation.

Talent shortages was a major problem for CIOs, with about three quarters of respondents either unable to find people with the right technical and business skills for roles or having no confidence they would be able to do so in future.

Similar to the types of skills shortages reported by UK businesses the most acute need is for experienced professionals to perform enterprise architect, business intelligence and analytics and security roles.

Again much like UK businesses, CIOs claimed the internal skills shortage could in part be traced back to the failure of outsourcers to provide the talent that firm's needed.

"Until a couple of years ago there were much higher hopes for what outsourcing would do for us," said Aron.

"The effect of that has been we weren't necessarily building the right talent to fill all of these roles because there was an expectation that outsourcing would save the day."

About

Nick Heath is chief reporter for TechRepublic UK. He writes about the technology that IT-decision makers need to know about, and the latest happenings in the European tech scene.

22 comments
RMSx32767
RMSx32767

talk the talk, walk the walk, money talks and BS walks. I suspect many CIOs will continue to do whatever is in the best interest of "maximizing shareholder value" between "now" and the next WallStreet report on dividends, etc.

Jenny_Z
Jenny_Z

I feel that this is just a matter of partner chosen and relations established. Outsource to Eastern Europe - we have high level of tech expertise along with strong command of English here and I am sure you would be satisfied with delivery. We work fast and for fair prices. Just imagine the positive impact to your business if you could start saving 40-50% of IT development costs. Besides, everybody knows that a lot of giant companies open R&D offices offshore. Welcome to Ukraine! Ukraine has a large resource pool of IT graduated professionals. And our IT companies strive to follow the best industry standards. We have close historical and cultural connections with EU countries, similar mentality. Business ethics is very similar to the conventional European business principles. Start project for short trial period and will see the difference.

Ernesto.Guiterman
Ernesto.Guiterman

It always paid to train 'your people'. Even if training looks expensive. And there was always a war for recruiting talented people. I ask myself why a survey makes that an idea (or better a concept) that has been alive for so many years, become “news”? Outsourcing can get savings and hence for a better bottom line, but only if there is scale factor big enough, and if we can offshore tasks with well defined borders. Certainly for trainig you will also need to know where the company is going to, and a good retention policy.

Gisabun
Gisabun

Meanwhile most places I've worked at provided very minimal training and eventually outsourced.

maj37
maj37

It depends on your definition of success as a CIO. If you are at a subsidiary and you define success as short term cost reductions that get you bumped up to a job at the parent company’s head quarters. Then the outsource method is the way to go, I know because 2 CIOs at our subsidiary have gone that path. They don't care about the long term success of the organization here which they have gutted.

tarose.trevor
tarose.trevor

Am I allowed to say "well duh" here? ... I just can't think of anything else to say which is equal to the intellect behind a company C level executive coming to the realization of what anyone else would call "the bleedin' obvious" ... it's all pretty sad really.

Locrian_Lyric
Locrian_Lyric

I'm one of the gray-beards now, but I remember banging my head against the wall for YEARS about this one. One company I worked for would periodically fire staff that knew the systems but didn't know the new shiny that the CIO wanted to bring in, then outsource to people who did. OOOPS! Those people knew the shiny, but not the systems that it needed to be integrated with! CIOs are often not aware of everything that is going on with their systems, who does what, and just how much non 'book knowledge' is involved in keeping their systems up, along with all the quirks that said systems have. CIOs also seem unable to express the concept of "value added" to the CFOs and CEOs who just see IT departments as good for spending money, and nothing else. I am pleased to see that the concept has at least made it to the CIO level, now if it can just make that final leap....

Dknopp
Dknopp

To the people in the trenches, this is non news. But so what? When it comes down to brass tacks, money rules over facts. And when a CEO/CIO wants to cut expenses - there goes the talent. It is all about short term nowadays, not company building.

dsteier
dsteier

Thank you Nick for your insightful article. It's a shame that most companies don't understand that fact. GE and a minority of other companies do understand that and grow, not only their managers from inside, but their entire company. Companies have known for a long time that outsourcing will give an instant 10% boost to the bottom line, but I have heard stories of a single programmer that was promoted to VP and the rest were let go, who now spends his time fixing the code that come in from their outsource partner. He gets paid a lot of money as a VP, but he is not doing his job and the outsourcers theirs. If you want the quality of service, then training (even for the oursourcing company) is necessary, or the quality of service will not be there.

tftan
tftan

well, there are many idiots sitting at the top level and keeps on making wrong decisions and compromise the talents pool ... just for the sake of so called "cost saving".

jonrosen
jonrosen

This is nothing most REGULAR IT staff has known as soon as outsourcing began. And guess what, we didn't have to go to business school, or even for managerial training. It's something called *GASP* 'common sense'. Too bad it stopped being common long ago.

michelk005
michelk005

Why has it taken this long for the million dollar idiots to figure this out. I watched HP flush its self down the toilet as they outsourced a large portion of IT and for that matter customer service offshore. It was all about the bottom line and bonuses for the top, they never thought to think about the future and the hole they were digging.

Tony Hopkinson
Tony Hopkinson

On a more important note. What do CEOs and CFOs say?

MyopicOne
MyopicOne

My old CIO slashed training budgets and looked at outsourcing as solving the talent problem, the expense problem, and the "employees know too much" problem, since most of us had figured out he was in over his head. He was, and he got canned.

Tony Hopkinson
Tony Hopkinson

You do high quality, fast and cheap? Wrong audience love. Try Management Republic.

Tony Hopkinson
Tony Hopkinson

Next fiscal statement, could be up to a year away you know. That's a looooooooooooooong time to wait to justify your bonus.

Tony Hopkinson
Tony Hopkinson

now they've finally admitted they got it wrong, the plan to make it right. They'll probaly ask the government to make academia supply suitable people, or something equally likely to have a beneficial effect.

steven
steven

Yep. I was one of those customer service reps ...a senior one. I knew the signs of times to come at HP when I requested training on VMware,about 6 years ago. It was approved. Then It was denied. I was told that this training was available only to the "xxx" group.(costa rica) The tragic comedy began about a year later. I discovered by talking to one of the Costa Rica personnel,that the long wait times on the phone were due to many employees leaving...and going to Intel....whom was also in Costa Rica. I have been in IT for a very long time. Here are some management tips to live by: Management is unable to correct themself and stupid mistakes they made along the way,the higher they are on the ladder,the more this applies. Upper Management does not comprehend that ex-workers talk to each other ,regardless of which company they now work for, because chances are pretty good that they used to work with each other and realise that they may be working with each other again in the future. Sometimes a company is successful because of management and sometimes a company is successful IN Spite of management. I now work for the competition. I am way too busy.A big part of this "busy-ness" is due to working with the offshore people. I spend hours ,just waiting for the offshore person to figure out the simplest stuff.Its not my job or position to mentor or train him or her.(differant company,differant employer , differant country and culture) They are doing what used to be MY job,they are the leader....the decision maker I am the subordinate...but now I get paid much overtime to WAIT for them to figure it out!!!!! (dont tell anyone.....keep it a secret!!!) :-)

Locrian_Lyric
Locrian_Lyric

That was the CIO's complaint of mine as well,

Locrian_Lyric
Locrian_Lyric

It just shows how far ahead of the curve we are :D