Have data loss and recession destroyed the case for outsourcing and offshoring?

The loss of the Home Office prisoner mash-up on an unencrypted USB appears to have triggered a long overdue “review” of the national children’s database (“the honeypot for pederasts”). Meanwhile the inflexibility of current contracts and the drop in the value of sterling have triggered similarly fundamental reviews of private sector ICT strategies..

According to some commentators it is only the lack of skills that prevents an implosion around lean, mean, secure and re-usable open source systems.


I published my first IT Skills Trends Report back in 1991 when recession had “cured” the shortages of the 1980s. It was not difficult to predict what would happen when the economy recovered. Before the recovery began I was reporting the growth of outsourcing as a means of supposedly cutting costs and avoiding the need to compete for the skills of the future that were in short supply even before the recovery gathered pace. 


The outsourcing trend reached its peak with the run-up to Y2K, as those unable to resource their software audits contracted out, even though they were unlikely to save any money. The dotcom bubble then saw the growth of offshoring, initially for legacy systems, then gathering pace with call centre and other clerical staff, now even for core systems.


Over that past year we have seen much publicity for the loss of whole databases by  government and the beginnings of revelations as to similar losses by the private sector – often, but not always, involving outsource contractors. Meanwhile the failure of cables to the Middle East and India and fears over the known sale of data from overseas call-centres had caused major private sector organisations to start looking at bringing critical operations back to the UK even before the fall in Sterling and rising prices in India changed the economics.


Now recession is triggering major business reviews – with whole departments being made redundant, along with their systems, as the business fights to survive. The inflexibility of traditional outsource contracts has led to legal battles that only the lawyers can win, and then only provided there is enough left to pay their fees.


We have crossed a watershed and appear to have entered a world in which businesses managed by short-term mercenaries hamstring by inflexible, bloated, outsourced, off-shored systems are destroyed by competitors whose in-house teams (loyal to the business not the technology) exploit the lean, mean, flexibility now offered by a new generation of software and services . Only the shortage of relevant skills is holding us back. Hence the urgency of the need to focus political attention on programmes to update those whose  ICT skills are no longer in demand – lest we outsource and offshore ever more of the UK economy, not just its ICT support infrastructure  .