Wake-Up Call From WorldCom
There's more than cost cutting to outsourcing.Nervous WorldCom Enterprise customers couldnt have been reassured by CEO John Sidgmores recent statement that the chances of a major service-level drop were low following news of $3.8 billion in accounting irregularities and the collapse of WorldComs share price to well below the cost of a pay phone call. IT managers who signed on with WorldCom for not just core voice and data networking services but also for bulletproof virtual private networks, voice over IP and business-to-business Internet infrastructure could only have been hoping for much stronger guarantees from Sidgmore as they scramble to find alternative providers or prepare to explain lower service levels to customers and partners. WorldComs troubles should serve as a wake-up call for IT managers who are considering outsourcing the operation of networks, data centers, call centers and other key pieces of enterprise infrastructure. Although it might be temptingespecially in the current economic downturnto view outsourcing as only a short-term, cost-cutting measure, doing so is risky business. Unless IT managers also consider larger issues such as the health of managed service providers, they could find themselves in the same boat as WorldCom customers.
Still, many high-level execs dont get it. For example, a recent survey of 150 senior executives at Fortune 1000 companies conducted by outsourcer Accenture found that companies planning to increase outsourcing are approaching it mainly as a means of cutting costs.