Sourcing department sophistication could reduce outsourcing

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Quite a few people I have spoken to recently have talked about the increased sophistication of the departments within businesses that are responsible for sourcing decisions.

This better understanding of outsourcing has developed after years of contract activity. This includes notable successes and failures.

Sophistication could lead to more outsourcing suppliers on the books of UK businesses but with smaller slices of business. Meanwhile existing in-house resources might offer up more resistance to outsourcing as CIOs weigh up the best means of supporting business projects on a case by case basis, with a better understanding of the pros and cons. After all it is the sourcing department rather than the outsourcing department.

I was talking to John Higgins, director general at IT supplier industry body Intellect. He was talking about the sophistication of today's internal sourcing departments. He said businesses don't want to outsource if they can avoid it, but will look at each project or job on a case by case basis and analyse the options. Sourcing departments need to be sophisticated to do this.

This will probably result in more outsourcers being used but all with very specific roles and there might be a reduction in massive single supplier contracts. It could also see a resurgence of in-house IT.

Sayings like "you don't lose your job for buying IBM" no longer ring true.

One of my colleagues wrote an interesting article. It was all about how broadcaster Sky is currently recruiting IT graduates to develop mobile applications. These graduates could become long term members of staff. It explains the importance of in-house resources for activities that make a company competitive.

Sky's director of software engineering Paul Cutter told Computer Weekly reporter Jenny Williams that Sky will train graduates as an alternative to recruiting skilled IT professionals. "As the company is growing, we acknowledge that we're unlikely to find a better fit for our roles. We want the right enthusiasm and aptitude for us to train. We also want to make sure we've got a pipeline of new talent," he said.

Mobile and web applications are critical to Sky's sales as a result of the explosion in the use of mobile devices to view content, so the company will future proof its business by having the staff in-house. Web user demands change fast so if a new application is required the in-house team will be in the best position to develop it. It would be quite painful to recruit new people or put out a tender a project.

I recently met up with the man heading up a team that is developing a pilot of a website that could be the single URL for all government online services and departmental websites. Tom Loosemre said with the government doing more and more online there should be more web developers working in government. In the pilot Tom said he had to bring contract developers in.  

Peter Brudenall, an outsourcing Lawyer law firm Lawrence Graham, says sourcing departments today are better equipped to weigh up all the options. "Internal departments have greater confidence because they have been through a few generations of outsourcing contracts."

He says as a result they better understand what works best, including the comparison between outsourcing and doing something in-house.

More experience of outsourcing means CIOs can compare in-house with outsourced as well as different types of outsourcing.

1 Comment

I've always felt that certainly for skilled jobs like IT that outsourcing was a bad move.

It's based on the assumption that someone for the same money (and very frequently less) can run the IT function better than can be done in-house.

In the real world the people who run these companies want to make a profit and the way they do this is to hire the cheapest staff possible and provide nothing unless they are forced to.

I don't think there can be a manger in the country who hasn't run into the old "that's outside the terms of the contract therefore it's chargeable" ploy!

Now I can understand this in companies which are not technical and have no in-house resources, but I have frequently seen companies with very efficient IT departments outsource the operation with depressing results for the company as a whole.

UK IT management needs to shed the "Kings new clothes" blinkers and realise that cost isn't everything, and that consistency, efficiency, and reliability are just as important (maybe more so).

"Spoiling the ship for a h'apath of tar" springs to mind

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This page contains a single entry by Karl Flinders published on May 16, 2011 3:26 PM.

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