Outsourcing 'backlash' highlights need for IT leaders to sharpen management skills

Growing number of organisations prepared to bring IT back in-house

Reports of the death of the traditional IT director as the result of the growth of outsourcing appear to be greatly exaggerated. Many large organisations are bringing key IT functions back in house. But IT leaders will need to hone their mainstream management skills to stay on top, say analysts.

A report from Deloitte Consulting suggested that a backlash against IT outsourcing had begun in some large organisations because contracts have failed to meet expectations (Computer Weekly, 26 April).

David Roberts, chief executive of the Corporate IT Forum (Tif), said trends were cyclical, and Tif had detected a shift away from outsourcing. "As relationships move from being contract-based to employee-based, people management and recruitment will become more of an issue, so will the need for managers to be fully up to speed with the latest coaching skills and training developments. IT directors must learn from others and benchmark through peer groups," he said.

Mike Davis, senior research analyst at analyst firm Butler Group, said users had become more experienced at outsourcing and were more prepared to bring deals back in-house if they were not meeting expectations.

"We are entering a maturity phase in the outsourcing market and you are getting much more professional IT managers," he said. "This is not a pendulum swing one way or the other but back to a middle way."

A more selective use of outsourcing will require IT managers to sharpen their business management skills, added Davis. "Bringing an outsourcing deal in-house is just another management skill and is no different than negotiating an outsourcing contract or service level agreement."

However, despite disappointment over the performance of outsourcing contracts, the Deloitte report suggested users could improve the way they manage outsourcing contracts.

Nearly 50% of those surveyed admitted they did not have a single methodology for evaluating the business case for outsourcing, and 26% said they needed to pay more attention to negotiation and managing supplier relationships.

Commenting on the report, the National Outsourcing Association, which represents both users and suppliers of outsourcing services, said many companies had signed outsourcing contracts for the wrong reasons.

"Many companies were eager to keep up with the Joneses and employ the latest solutions and fell over themselves in the bid to outsource. But haste and lack of preparation can be fatal. Outsourcing is not the let-down - it is companies' lack of preparation and research that causes outsourcing projects to fail," it said.

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