Thought for the day:Isn't outsourcing over?

Outsourcing and communications expert Martyn Hart looks at a hot issue of the day."Surely," I was told by a leading IT manager,...

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Outsourcing and communications expert Martyn Hart looks at a hot issue of the day."Surely," I was told by a leading IT manager, "you'll rename the National Outsourcing Association the National Insourcing Association now." He pointed triumphantly to the news about Xansa and The Bank of Scotland demerger and then mentioned a SOCITM report about how outsourcing costs 25% more.

He went on, "Even your own has an item about outsourcing not cutting costs. Let's face it, mate, outsourcing is over."

Maybe my erstwhile chum had missed Gartner's latest work saying that in IT, outsourcing was the only growth area, giving a conservative 10% compound annual growth rate (it's conservative because it's the lowest figure I've seen). And business process outsourcing is growing by 30%.

But read a bit deeper and you will see that most of these more positive reports have been produced by people with a vested interest in IT. Let's face it, turkeys aren't going to vote for Christmas.

In fact we've seen all this before, when it was the Telecoms Managers Association. TMA surveys of telecoms managers always pronounced that outsourcing wasn't catching on, until there were no telecoms managers left.

The TMA took a sensible decision and recognised that only by delivering business value would their members survive, and changed its name to the Communications Management Association. Not forgetting its heritage, it now concentrates on helping its members deliver business value through communications technology and it has survived.

The NOA takes a different stance. We believe that if you can't equal or better the benchmark with your in-house delivered services, then you should outsource, core competence or not, because if you don't, then even a mediocre competitor may be beating you. Think of the management time you're wasting on doing something second best.

Outsourcing comes in two flavours, strategic and tactical. If you're just looking for cost savings, you're tactical, you're probably deep in the detail and maybe you can't see the whole picture. If you are strategic, you're solving business problems and, according to CIOs that are members of the NOA, having fun!

What's your view?
Is it all over for outsourcing? Let us know with an e-mail >> reserves the right to edit and publish answers on the Web site. Please state if your answer is not for publication.

Martyn Hart is chairman of the National Outsourcing Association and practice director at Mantix, a consultancy that delivers value from complex programmes.
This was first published in February 2003



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