Aberdeen Study Finds Effective IT Outsourcing Requires Oversight
August 17, 2006
When it comes to IT outsourcing, there’s simply no shortcut when it comes to managing the outsourcing provider and managing outsourcing expectations, according to a new report from high tech research firm Aberdeen Group.
According to “The Business Value of IT Outsourcing Benchmark Report,” outsourcing an IT function or service is a complex and significant initiative that requires more up-front thought, strategy, and executive effort than most companies realize. As such, the most effective way to realize tangible results begins by treating outsourcing as a strategic issue rather than simply as a tactical way to cut costs.
“The key for an outsourcing buyer is to do its homework beforehand and determine what it wants, what service levels it will accept as satisfactory, where the buyer can find a provider, and how much it’s willing to pay to get the job done right.,” said Rick Saia, research analyst of Information Technology Services at Aberdeen Group.
The benchmark report found that an overwhelming two-thirds of respondents (67 percent) said their companies outsource at least some of their IT work. The survey focused on eight different IT activities: applications development or maintenance (ADM), data center computing and operations, end-user computing (e.g., PCs and help desk), business continuity, disaster recovery, IT security, voice network management, and data network management.
The study concluded that many companies are struggling to get the value they're looking for, though some reported satisfactory results with such functions in the area of data center operations and ADM.
Companies that do a better job of managing the outsourcing provider do so by applying more management time and talent, creating new internal cross-functional structures to manage outsourcing relationships, and being more willing to escalate problems with an outsourcing provider to its senior executives. However, a significant portion of those effective companies (33 percent) doesn’t believe it has the right IT skills or number of staff to manage their outsourced environments.
“If a provider is falling short of expectations, you want to make sure you get them back up to the level of performance you expect. It’s like the kid in school who can’t seem to grasp algebra; you give him a little more help or a pep talk in the hope that he’ll pick up his grade,” Saia told ContactCenterSolutions in a brief email interview.
On the other side of the equation, about one-quarter of those sampled in Aberdeen’s survey don’t outsource. The top three reasons respondents gave for why their companies don’t outsource IT have long been common: loss of control of IT resources; IT is a core competency; and company strategy does not include outsourcing.
The study was conducted online in June involving more than 130 business professionals worldwide, mostly in corporate IT roles. The survey was sponsored by RampRate.
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Robert Liu is Executive Editor at ContactCenterSolutions. Previously, he was Executive Editor at Jupitermedia and has also written for CNN, A&E, Dow Jones and Bloomberg. For more articles, please visit
Robert Liu's columnist page.
