IT outsourcing: the expert view

Thursday 31 May 2007 11:00

IT outsourcing is a way for companies to pass the day-to-dayrunning of their IT business processes to third-parties.

Although not uniquely a technology concept, outsourcing IT has become a key consideration for all IT directors.

Most business processes rely heavily on technology, thus IT outsourcing became a popular option in the 1990s. Companies identified the capital, time and space-savings associated with reductions in staff, training, equipment and work environments as advantages of outsourcing IT.

An outsourcer has highly trained engineers and consultants with expertise in particular technologies and business processes. Businesses harnessing outsourcing negate the need to invest heavily in the recruitment of qualified staff as well as the training of existing workers. IT outsourcing also addresses the problem of skills shortages which regularly slows the delivery of IT projects.

The avoidance of expensive recruitment activities, and all the costs associated with permanent staff, meant IT outsourcing was seen as a cost cutting measure.

However, businesses are now viewing outsourced IT as an opportunity to create new business through improved performance such as better customer relationships.

As a consequence IT outsourcing comes in many forms. A bank may outsource its call centre operations to an offshore location such as China or India. The same bank could decide to hand over the management of its entire IT infrastructure or even its application development to a partner. A council could put management of its contact centre in the hands of a third-party specialist, while an SME could decide to outsource its IT security function to keep up with rapidly changing threats.

As well as different types of IT outsourcing, key questions faced by IT directors when outsourcing IT services, include whether to offshore, nearshore, or onshore.

Outsourcing IT does, however, present different challenges. Learning how to manage relationships with outsourcers, engaging in industrial relations disputes with outsourced workers and designing service level agreements are a few.

Major outsourcers include; EDS, Accenture, Unisys, BT, CSC, Capita, PricewaterhouseCoopers, Fujitsu, LogicaCMG and CapGemini.

IT outsourcing news stories

February 2008: Government outsourcing IT to overcome skills shortage >>

January 2008: Shell to outsource hundreds of UK IT jobs >>

January 2008: UK firms continue to pick India for outsourcing >>

January 2008: AA brings datacentre back in-house to cut costs >>

January 2008: LogicaCMG creates new outsourcing division >>

November 2007: Deutsche Bank outsources to HCL Technologies >>

August 2007: Lloyds TSB to outsource 210 IT roles to India >>

July 2008: British American Tobacco outsources network security >>

May 2007: Tesco signs £18m IT contract extension >>

May 2007: Allianz signs outsourcing deal with Fujitsu >>

May 2007: Hewden updates network and services with renewed BT deal >>

May 2007: Dorset Council signs services deal for contact centre >>