Even though IT outsourcing has been around for eons, it seems, it still has a Rodney Dangerfield air about it. It just don’t get no respect, if you know what I mean — at least in some circles.
Unfortunately for providers, the industry’s dirty laundry has had a very public airing over the years. A large number of high-profile deals have gone south, involving customers such as the Government of Canada, General Motors, JPMorgan Chase, AT&T Wireless, and Dow Chemical, to name but a few. It doesn’t take many of these public floggings to get people thinking that outsourcing may not be their cup of tea.
But spectacular flame-outs notwithstanding, there are plenty of organizations willing to outsource. Over a third of respondents (36%) to our recently conducted Salary Survey 2006 for IT Professionals indicated that their organizations plan to outsource all or part of their IT operations in the upcoming year. That’s a pretty healthy number, but it loses a little lustre when weighed against the 27% of respondents who indicated their organizations would be backsourcing some IT functions in the same timeframe. (Check out our May issue for a deeper dive into the Salary Survey stats.)
There’s ample evidence to show that if done correctly, however, substantial benefits can be derived from outsourcing deals. And what’s more, they can leave the CIO sitting in the catbird seat.
A case in point is the IT infrastructure deal between Canadian Pacific Railway and IBM Canada, inked in December, 2003 (see Anatomy of an Outsourcing Operation, pg. 14). It’s a biggie — seven years, $200 million — and not only is it making a significant contribution to CPR’s bottom line, it’s also returning some impressive service benefits. For Allen Borak, Vice President Business Information and Technology Services, the deal has cleared his desk of a lot of operational headaches and given him the luxury of spending more time on higher level activities. There’s no doubt in his mind that the deal has been a good thing.
Still, as Yogi said, “It ain’t over till it’s over.” And those backsourcing statistics I mentioned earlier seem to bear that out. So maybe we’ll check back in three or four years to make the home-plate call on this one.
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