Where is IT outsourcing heading in 2013?
- 16 October, 2012 11:43
Looking to 2013, analysts have predicted that organisations will become more cautious about outsourcing their IT staff, savvier in evaluating contracts and more selective in the services they choose to outsource.
Deloitte Consulting technology leader Robert Hillard said organisations will bring more IT back in-house, as they become more cautious about the consequences of outsourcing and offshoring too much of their IT talent.
“We’re actually seeing a reduction in the number of roles going offshore,” he said. “If you want to be able to govern your IT then you need senior technology workers and you need to get them from somewhere. It is best if they have grown up in your organisation.
"If you have outsourced too many of your IT workers then you don’t have a pool of talent who are going to grow through to your next-generation of senior management… you lose access to that pool of innovation.
“I think around the world people are actually wanting to bring an amount of their IT back [in-house] and perhaps tamper some of that trend towards outsourcing, [which will] continue but not at quite the same pace… It’s very hard to outsource innovation.”
IDC head of research Matthew Oostveen said there will be shorter contracts with IT service providers, with CIOs becoming savvier in evaluating outsourcing agreements and how they meet business needs.
“What we are going to see is a shrinking of the contract length," he said. "So instead of the long-term outsourcing agreements – seven years, eight years – we’re going to see those contracts shrink down to three years, four years, five years,” he said.
“CIOs in Australia are becoming much more savvy about the business impact that outsourcing is having on their organisations.”
Gartner vice president and distinguished analyst Rolf Jester’s predictions are different to Hillard’s. He said traditional outsourcing will dominate in infrastructure service investments in the coming year. However, cloud computing and multisourcing will continue to play more of a role in this as they mature.
“Traditional outsourcing will still represent the majority of the infrastructure services expenditure in 2013, a total of $6.6 billion, compared to the much smaller IaaS [infrastructure as a service] spending of $385 million mentioned earlier. But the much faster growth rate of cloud services will see IaaS become 10 per cent of the total by 2016," he said.
“Many Australian organisations have built up mature sourcing practices, and some are using disciplined multisourcing to help achieve business outcomes. They are now looking to the next step in standardising and industrialising the operational aspect of IT.”
Telsyte senior analyst Rodney Gedda said we can expect to see more selective IT outsourcing in 2013 as there will be more providers offering “niche services… including those that make liberal use of the ‘cloud’ marketing tag”.
“The main change will be around the ability of outsourcing providers to compete with the economics of on-premise IT and how effectively a service can be delivered by a third-party in a cloud fashion that does not require a ‘hands-on’ engagement,” he said.
Download the CIO Australia iPad app CIO Australia for iPad
Other trends to watch out for in 2013:
- Where is cloud computing heading in 2013?
- Where are big data and BI heading in 2013?
- Where are mobility and the consumerization of IT heading in 2013?
- Where is green IT heading in 2013?
Join the CIO Australia group on LinkedIn. The group is open to CIOs, IT Directors, COOs, CTOs and senior IT managers.
Larry Page wants to see your medical records
Dual-Persona Smartphones Not a BYOD Panacea
After two-year hiatus, EFF accepts bitcoin donations again
CIOs struggle to deliver timely mobile business apps: survey
Spiceworks' free management software gets integrated MDM
Hybrid IT Service Management: A Requirement for Virtualisation and Cloud Computing
When competition is tough and resources are limited, corporate leaders are depending on growing their existing capabilities in order to grow their business. Information technology can be a unique catalyst for business growth, delivering a competitive advantage when creatively applied to established and emerging problems. Read more on what trends are accelerating the value of IT.
Clearing the Clouds for Midmarket Businesses
Cloud computing promises to help midmarket companies reduce cost and complexity in the IT equation – and gain the flexibility and agility they need to thrive. Yet charting a clear course to the cloud isn’t always easy. In this paper, we aim to clear the clouds. We examine different cloud computing models, discuss the types of requirements that each can best address, and consider what midmarket businesses should look for in a cloud solutions provider.
Cloud Computing for Midsize Businesses: Delivering Innovation and Efficiency
It’s time for midsize companies to start thinking differently about infrastructure. This white paper provides a brief overview of cloud computing, explains how midsize companies can benefit, and describes the steps they can take to take advantage of what it has to offer. Read now.