Thank you for bringing an open view to this environment. Having been on both sides of this equation, I think everyone needs to understand that they are giving up a lot in the long term to absorb risk and maybe save in the short term. Once gone, those business skills are never coming back and there are no fixed prices, only change variability. My experience in one of the large outsourcers led me to change my beliefs on the subject, start my own company, and show companies how to do it themselves and save much more while advancing business and employee acumen. There may be one or two big deals left, but the size focus and shift to complex distributed environments shows their dilemma. Without successfully re-treading the service bureau model of the late 70s and early 80s under the “utility” sales header, the outsourcers are running out of gas and are hitting an optimization wall with their own environments and numbers of employees. Averaging of skills, offerings, and value will kill the idea again as it did twenty years ago or continue to add to the layoff situation. Amazingly, one of your sources in the article pointed to the same reason and spun it as a risk to the client. Thanks again.
James S Chester
President & Chief Executive
I enjoyed reading your recent “Face Up to Outsourcing”. I have a new, small, IT consulting business that is attempting to look at these issues from a customers viewpoint—rather than a vendor viewpoint. I spent most of my IT career on the vendor side of the business and understand why they (particularly IBM) are concentrating on services. However, there isnt anyone out there saying how customers can capture outsourcing savings and other benefits without actually doing an outsource. Let me try out a theory Ive been thinking about on and off for the past five year on you…..
Heres my theory: If customers could exert the will to change their IT operations in the same ways that an outsourcer would (streamline, standardize, consolidate, etc.) they would be able to pocket the savings that the outsourcer is offering (10%, 15%, maybe even 20% over a 5-year contract), PLUS pocket the savings that would be the outsourcers profit margin (maybe another 10, 15, or even 20%). This amount of savings and/or cost avoidance is enough to get noticed, particularly in these economic times.
The main impediments to doing the above are, in my opinion, cultural and political rather than technical. It takes leadership and, as I alluded to above, a strong dose of will power to push through the obstacles to success. What do you think?
Thanks again for writing the story….
Gabriel Consulting Group, Inc
I suspect that there is a difference between outsourcing and out-tasking.
Inter-American Development Bank