IT Management
Outsourcing twice removed


IT managers will have to develop new skills to ensure outsourced IT work is properly managed, or their firms may face a wide range of difficulties, says Madeline Bennett.

IT Management

I was speaking to a programmer friend at the weekend, who described a less-than-satisfactory outsourcing project currently underway at his organisation. The IT project had been outsourced to a UK specialist, he said, which had in turn handed over part of the work to an offshore facility.
All fine in theory but unfortunately not in practice.My friend went on to explain that the work coming back was of such poor quality that his organisation had drafted in other external contractors to sort it out.

The situation he described echoed a recent story about a programmer in the US. This particular individual claimed to have outsourced the bulk of his $67,000 programming job to a developer in India, who he paid $12,000. This left the US programmer with just an hour-and-a-halfs work each day supervising the code.

Although this story turned out to be false, theres no reason why situations similar to this couldnt actually happen if outsourcing is not properly managed as with my friends experience.

According to analyst firm Gartner, the role of IT directors is changing and they are becoming relationship managers. It predicts that over the next five years, a third of the current chief information officer (CIO) roles will have transformed or disappeared, and IT managers will need to spend more than half of their time managing relationships outside their enterprise as outsourcing grows.

There is ever-increasing pressure on IT departments to cut costs while aligning their operations to business objectives to add value. To do this, there is a strong argument for outsourcing basic and non-core IT operations, allowing internal technology teams to focus on using and developing IT to gain a competitive advantage.

Many outsourcers try to sell their services by saying they cover technology such as application development, web services and claims processing on such a large scale that they can do the work at a lower cost than in-house IT staff.

If this kind of outsourcing continues to grow, most IT functions could eventually be farmed out, leaving the in-house IT staff who survive as the link between the outsourcers and the business. If this happens, people skills and contract management expertise are no longer going to be nice-to-haves but must-haves.

Sensible IT managers will plan now to improve their expertise in such areas in preparation for the changes. They will also use the time to close the gap between key IT functions and business strategy, demonstrating that their work and that of their staff adds value, and is not just a cost centre.