Andrew Channels Dexter Pinion

Wherein I write some stuff that you may like to read. Or not, its up to you really.

April 27, 2004

Outsourcing

Is it just me, or is the current fashion for sending jobs offshore (Shell being the latest) in any way reminiscent of the great outsourcing boom of the 80's and 90's? I'm talking about when the IT strategy du jour was to hand over great chunks of your company to IBM, EDS, CSC or Cap Gemini in the expectation of saving millions of pounds (shekels, euros, dollars, whatever) in costs a year?

Does everyone remember how successful that was? I've been involved in a few companies where various IT functions have been outsourced and none of them have ever lasted beyond the initial contract. The end of result is usually that IT returns in house and all talk of cost savings is forgotten. If I had to give a reason for this observed behaviour I would say it is because an external supplier is focussed on maximising their profits whilst an internal team should be focussed on maximising yours. The cost savings are always thought to be in reducing the number of people working on providing your IT services because the supplier you choose must be more efficient than your own people, right? Either that or you can share a mainframe with other companies and reduce your expenses. Oh, hang on, even people who run mainframes don't have spare capacity these days so that argument is shot down very quickly.

That's not to say that you can't outsource/offshore specific pieces of work like development projects or specific infrastructure upgrades. These are the real strengths of outside suppliers. But just shifting bodies from one location to another isn't going to save you any money, in fact it will probably end up costing you more.

Posted by Andy Todd at April 27, 2004 09:55 AM

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