The employees in the half of the IT organization that remains in-house are mostly embedded in the business units, intimately linked to their respective companies' business objectives. IT can now focus its energy on breakthrough use of technology to drive business innovation and value creation. Examples include creating real-time business intelligence systems or managing interactive marketing initiatives (For instance, the digital brand manager of Covergirl.com works in-house.)

In sum, outsourcing should not be a binary, all-or-nothing game. Determine if there are pieces of your IT shop that could be delivered by a partner who offers greater efficiency or expertise. If so, don't ignore the opportunity out of professional pride. Money saved in your IT back office can be reinvested in your strategic front office to drive business value or simply give back toward the company's margins if that's what's needed.

Major-league baseball is rife with examples of teams that neglected to invest in their minor-league farm systems, either to save money or because they traded their best young talent for "hired gun" free agents who could help them win immediately. In virtually every case, those pro teams went through prolonged bad times as they painstakingly rebuilt their talent base.

Outsourcing, if done wrong, is likely to produce similar problems. How do you grow and develop your talent base, providing broad and essential hands-on experience, when you're moving many of these roles outside? I believe this is going to be the hardest challenge for corporations embarking on an outsourcing journey.

To ensure the long-term development of young talent, CIOs can make a difference by how they outsource. First, determine the most important IT skills for your organization and retain enough of this work in-house to offer sufficient development opportunities. Do this even at the risk of leaving some outsourcing efficiency dollars on the table.

For example, if your company moves its programming offshore, don't move all of the work offshore. At a minimum, keep early-stage prototype and pilot development in-house. This work tends to be very dynamic and needs to be close to the business, so it's not generally very efficient to outsource it anyway. More important, it provides the projects in which your young talent can get hands-on learning that will serve them later in their careers as they are managing large development projects with outsourcing partners.

I'd like to see CIOs extend this farm system metaphor beyond the walls of their companies to education. With enrolment down 23 percent for IT-related majors, CIOs need to become actively involved with universities and even the K-12 education systems in their respective communities. Serve on university advisory boards to help shape the curriculum and to assist universities in recruiting top students for IT majors. Dispel the gloom-and-doom message that students are hearing in the media by putting the offshore trend into proper perspective. Get your best and brightest young talent into the classrooms to speak firsthand about the exciting things they're doing on the job.

These "farm system" investments have a long payout period. But they're worth it. As IT professionals, we have the broadest perspective of anyone in our companies - able to see across functional and business boundaries. Let's apply this same broad perspective to our own functional discipline - IT - to make sure that it flourishes as we go through such dramatic changes in our industry.

Geoff Smith recently retired as deputy CIO of Procter & Gamble and founded LP Enterprises, which provides information technology, strategy and customer relationship management expertise to clients. He can be reached at geoff.smith@fuse.net