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“IT outsourcing gaat alleen maar toenemen” zegt Sven van de Riet, senior researcher bij Giarte, outsourcing performance onderzoek, in antwoord op een artikel van Tom Davenport over dat bedrijven minder zouden gaan outsourcen.
Last week, Tom Davenport published an article on LinkedIn in which he argued that companies have stopped outsourcing IT. He says on outsourcing that ‘it is a practice that is in decline for all but the most commoditized IT activities—and even the outsourcing of those is at risk.’ Further he argues that Outsourcing was done when IT was seen as a cost of doing business and that the rise of digitization makes IT strategic again.
I would argue that IT has been strategic for all these years and that digitization will accelerate the use of outsourcing.
Davenport illustrates the insourcing movement by pointing out that one manufacturer rehired 10,000 application developers. But just because GM does it, doesn’t mean that this strategy works for all companies.
Especially smaller (but still large) companies have difficulties attracting the right IT talent to manage all those new challenges: cyber security, mobile apps, social analytics plus the need to integrate all these solutions at some point. When companies become more digital, we see that they increasingly outsource more of their IT-operations. And there are a lot more smaller companies than bigger companies, so outsourcing is here to stay.
Sure, we also see that some companies follow the strategy to bring back some work they previously outsourced – mostly work on digital applications. But most of them are in the position that they have the scale and brand power (like GM) to attract talent. One CIO told me that it is absolutely impossible for him to hire all professionals he needs, because his company is invisible for IT talents.
Davenport also argues that companies decreasingly have data centers, because SaaS and cloud solutions include their functionality. There would be less to outsource as a result of this shift. This conclusion is a little short sighted. You have to realize that those old data-centers did have a purpose. That purpose, storing and computing, is still alive even though it’s implementation is now repackaged as SaaS or cloud.
Storing and computing is now repackaged as SaaS or cloud.
I wouldn’t be surprised to see that the current tight integration between the application side of SaaS and the data storage in the cloud comes to and end. The SaaS provider will still run the application, but my data can be elsewhere (e.g. in a local data center of my service provider). You can see the recent rulings on Safe Harbour in Europe as a prelude to this movement.
Most likely, companies will try to find a balance between activities to perform themselves and activities that they will outsource. And some organizations do not have that luxury and are forced to outsource part of their IT needs.
I agree with Davenport that creating distinctive digital solutions is not something that you can outsource completely. But it is also true that external service providers can help to create competitive advantage. While you can offer your business insights, they can offer scale, speed and technical know-how. We live in a digital, open economy: smart companies recognize that there are more resources and talent outside their boundaries than inside. Outsourcing fits perfectly in this picture.
Creating competitive advantage is not dependent on outsourcing or insourcing. It is dependent on having an original strategy and – more importantly – a flawless execution of that strategy. When a partner can help you to deliver that advantage and get things done, outsourcing can be of great strategic help.
Auteur: Sven van de Riet, senior researcher bij Giarte, outsourcing performance, 21 okt. 2015
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