- 12 Sep 2011
IT Outsourcing – the trends
Having just read the European IT Outsourcing Intelligence Report 2011, I thought there were some key areas of interest regarding the factors taken into consideration when making the decision to outsource IT. It was apparent that choosing a provider within your own country, and nearshore were the preferred outsourcing destinations, whether companies were looking to outsource selected services or an entire IT department.
There may be numerous reasons why businesses explore outsourcing, however the report suggested that the top three driving the decision to outsource IT / Software development were based on a desire to reduce operating costs (this was up 38% from the 2010 report), a shortage of domestic IT skills and resources (this increased 19% from 2010) or a need to focus on core competences (an increase of 16% from 2010).
The most important factor when making a decision between Outsourcing Partners (OPs) was cited as the successful OP having an innovative and flexible business model, followed by them having sound experience of similar projects and successful pilot completion.
More and more UK outsourcers are coming to realise the importance of engaging with their IT outsourcing partner through innovative business models that are able to provide agility, scalability, speed, pricing transparency and predictable Software Development / IT spending.
It was felt within the report that many outsourced contracts which were eventually back sourced failed due to the focus on short-term savings during the OP selection process. This was to the detriment of looking to establish a long-term relationship. Short-termism can often result in dissatisfaction which could have been prevented had the correct steps been taken at the pre-engagement and vendor selection stages.
However dissatisfaction levels were comparatively low within the study, with almost 60% of current UK outsourcers planning to continue with their outsourced operations over the next 12 months, and only 17% planning to terminate / back source their contracts, suggesting that outsourcing is ultimately set to grow within the UK marketplace.
Has anyone else read this report? If so what are your thoughts on this and current outsourcing trends?