Outsourcing: IT Customers disappointed with results

Forget all the discussion about IT outsourcing providers moving up the technology value chain to become partners in innovation; their customers' biggest needs remain much more straightforward, according to the results of the IDG Enterprise Outsourcing & Service Providers Survey. (CIO.com is an IDG company.)

The three biggest drivers for outsourcing among the 1,176 IT and business executives who responded to the online survey were access to skills not available in-house (52 per cent), cost reduction (50 per cent), and managing variable staffing needs (44 per cent). Around one-third of respondents were looking to third-party providers to support or enable new business initiatives or to improve business and technology processes, while 19 per cent sought outsourcers to enable innovation.

The leading motivations for outsourcing were reflected in the factors respondents considered most important when selecting a provider. When choosing an onshore vendor, the most critical criteria were cost (94 per cent), technology or business process expertise (92 per cent) and available talent pool (88 per cent). When choosing an offshore provider, reputation leapt to number one (90 per cent), followed by expertise (89 per cent), available talent pool (88 per cent) and cost (87 per cent).

The survey also revealed that achieving the desired results from outsourcing remains a work in progress. Just 44 per cent of respondents said they had achieved a measurable positive impact accessing hard-to-find skills, while only 34 per cent achieved measureable cost reductions and 36 per cent attained the flexible staffing model desired.

The vendors themselves may not be entirely to blame for the lack of results. Survey respondents didn't give themselves rave reviews for their management of their outsourcing relationships. Just over a quarter rated their own service delivery management and measurement practices as very effective, while 42 per cent said they were somewhat effective and 12 per cent said they weren't effective at all.

Marks for overall outsourcing strategy were also mixed. Three out of five of those surveyed said their outsourcing strategy was somewhat effective-in alignment with their overall business strategy but not a main driver of business success. Meanwhile, 18 per cent said their outsourcing strategy was extremely effective-a key component of their success in meeting business goals. But 22 per cent indicated that their outsourcing strategy was ineffective and reactionary.

The middle-of-the-road results may not temper the use of external IT services (just seven per cent of respondents said they planned to decrease their use of outsourcing). But it could make cloud-computing options more attractive. Nearly three quarters of respondents said they are considering cloud computing as an outsourcing option; 13 per cent are working with existing outsourcing vendors to move to cloud-based services, and 10 per cent are replacing existing outsourcing services with new vendors who can tap the cloud.

Whether cloud-enabled providers will address the biggest perceived outsourcing risks according to the survey (i.e. poor service quality, data security/intellectual property protection, and loss of internal knowledge-remains to be seen. Customers will likely have the same concerns with cloud options.

Read more about it organization in CIO's IT Organization Drilldown.

Join the PC World newsletter!

Error: Please check your email address.

Tags business issuesservicesManagement Topics | IT OrganizationManagement TopicsoutsourcingbusinessIT outsourcingoutsourcing resultsoutsourcing survey

Our Back to Business guide highlights the best products for you to boost your productivity at home, on the road, at the office, or in the classroom.

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Stephanie Overby

CIO (US)
Show Comments

Most Popular Reviews

Latest News Articles

Resources

PCW Evaluation Team

Azadeh Williams

HP OfficeJet Pro 8730

A smarter way to print for busy small business owners, combining speedy printing with scanning and copying, making it easier to produce high quality documents and images at a touch of a button.

Andrew Grant

HP OfficeJet Pro 8730

I've had a multifunction printer in the office going on 10 years now. It was a neat bit of kit back in the day -- print, copy, scan, fax -- when printing over WiFi felt a bit like magic. It’s seen better days though and an upgrade’s well overdue. This HP OfficeJet Pro 8730 looks like it ticks all the same boxes: print, copy, scan, and fax. (Really? Does anyone fax anything any more? I guess it's good to know the facility’s there, just in case.) Printing over WiFi is more-or- less standard these days.

Ed Dawson

HP OfficeJet Pro 8730

As a freelance writer who is always on the go, I like my technology to be both efficient and effective so I can do my job well. The HP OfficeJet Pro 8730 Inkjet Printer ticks all the boxes in terms of form factor, performance and user interface.

Michael Hargreaves

Windows 10 for Business / Dell XPS 13

I’d happily recommend this touchscreen laptop and Windows 10 as a great way to get serious work done at a desk or on the road.

Aysha Strobbe

Windows 10 / HP Spectre x360

Ultimately, I think the Windows 10 environment is excellent for me as it caters for so many different uses. The inclusion of the Xbox app is also great for when you need some downtime too!

Mark Escubio

Windows 10 / Lenovo Yoga 910

For me, the Xbox Play Anywhere is a great new feature as it allows you to play your current Xbox games with higher resolutions and better graphics without forking out extra cash for another copy. Although available titles are still scarce, but I’m sure it will grow in time.

Featured Content

Latest Jobs

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?