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CIO Insights: IT offshoring/outsourcing — how much is too much?

Rebecca Merrett | Sept. 19, 2013
Three Australian IT leaders share their advice

It's a matter of drawing a conclusion in your own mind on what can stay internally, what must stay internally and what you can afford to give up. Have a position that you think will work and then articulate the pros and cons of it. But it's important to have trust and credibility with your CEO, have a good quality relationship where you are going to be listened to in the first place. It can be successful, but it needs time and investment and it needs to fit into your long-term strategy.

Alex Jones, CIO at Synergy
People have very strong personal opinions when to comes to offshoring or outsourcing. Too often decisions are driven by opinion and emotion and too little by fact. That's the wrong angle to come at it from, you have got to try and take a step back. There are many people who have strongly positive or negative experiences from the past that they bring into the situation; they tend to believe that whatever they have experienced in the past is what's going to happen again.

The key with this kind of discussion is take the opinion and emotion away and strip it back to what it is: a business transformation. Talk about it and plan it in those terms. Then, hopefully the benefits or disadvantages of the different options should become apparent through a more rigorous and objective process. If you let it become an emotionally driven issue, you are not going to be treated with much respect.

You have also got to remember that the vendors who are providing these services are in business to make money as well so they are always going to be presenting you with reasons why you should extend your investment with them. But it's up to the organisation to make the right commercial decision in its own interest.

I think in any material decision that gets made, whether it's at the start or along the way, you have got to make sure you are making it from an objective perspective rather than just the default — the default being allured into more and more offshoring or outsourcing.

It's true that in some situations you could actually limit your agility if the kind of agreement you have with the outsourcing company is very specific and you would have to change the commercial agreement, which takes time. On the other hand, you might have more agility with an outsourced company if they are much more able to obtain the latest technical skills that you can't just go and hire yourself every five minutes.

It can be quite difficult, especially in an organisation whose core business is not IT, to look after the careers and the skill sets of technical staff whose whole focus is staying up-to-date with technology. Some IT staff might see their career path as staying up-to-date with the latest in their area of technical expertise so that in five years' time they can go an implement the next latest technology. The company, however, doesn't want that; it wants to keep the technology it has got and to keep it running and not have to upgrade it to the latest and greatest all the time.


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