Counsel for the prosecution: Gareth Kershaw

OK,  I know it’s important to observe due process and judicial protocol and all that other legal blah, blah, blah.
But seriously, the accused couldn’t be more bang to rights here if it were holding a smoking gun in one hand, signing a confession with the other, and wearing a t-shirt with the words “I done it guvnor, it’s a fair cop” emblazoned across the front of it. In blood.

Yes, outsourcing is sooooooo guilty that, frankly, even a high court judge could figure it out. For while divesting all or even part of your technology function to a third party has never been more tempting, it’s also never been riskier.  

Let’s see. First the financial implications. Despite popular misconception, outsourced IT services are often expensive; to buy into, to maintain, and to exit. There are the providers’ unjustifiably Orwellian attitudes to Capital Expenditure (Opex good! Capex bad!) –  a gross over simplification that only really holds water, of course, if the Opex involved isn’t ridiculously inflated. Also, given the impractical, unenforceable nature of many SLAs, that familiar spiel that there are no hidden extras really is total bunk in many cases.

Then there’s the one-size fits all approach delivered by many managed service companies. Forget the sales pitch; many packages are rigid and inflexible, while most providers don’t – indeed can’t – have the focus, the expertise, and the specialisation in your business and your sector that you do.

Accordingly, if you outsource the wrong part of your business, or to the wrong supplier or worse, both, the danger of throwing out your baby with the bath water is a very real one.

Among the other common myths is that managed services give you instant access to the very latest technologies without the associated expense – a comforting notion, but rarely true. Smaller providers often face many of the same scalability issues the rest of us do, while the bigger the provider, the more risk averse and slow moving they’re likely to be.  

And what about lock-in? It can be just as big a danger with outsourcing as it can with conventional technology vendors –
think eggs and baskets here.

What else? Ah yes. Outsourcing means, at a fundamental level, divesting responsibility for your business to people you don’t know using processes you didn’t devise. As such, it takes you, your people, their skill sets, their loyalty, and their vigilance completely out of the equation. The customer service implications alone are frightening.

Still not convinced? Then let’s go over a couple of stats. A recent survey reported that nearly 80% of managers who have outsourced IT functions have terminated the contract early; another that outsourcing plainly “fails to live up to expectations” in 75% of cases.

The truth is that, far from being the universal panacea it’s often portrayed as, done arbitrarily outsourcing can end up being the worst of two worlds for the IT director – who ends up retaining all the responsibility for his IT function with
none of the control.

So here’s the thing. If you’re happy to leave not just your IT, but your business’s reputation, its service standards, its fortunes and its future in the hands of someone else, by all means return a verdict of not guilty. But I’d rather you didn’t. Times are quite uncertain enough thank you very much.

Counsel for the defence: Mark Dye

Ladies and gentlemen of the jury, I stand before you at what is indeed a difficult time for us all. Liquidity, confidence, and trust have disappeared from both the financial markets and the institutions that serve them, and for many businesses the future looks as uncertain as it does bleak.

As such, it is obvious that the only course is for us all to become insular, paranoid, and mistrustful. Then again, though I know it’s a long shot, we could try using our heads instead of burying them in the sand and hoping it all goes away.

Outsourcing for instance. Why wouldn’t you consider something that can not only rein in your technology costs (and yes outsourcing is generally an extremely cost effective measure, whatever the prosecution might say) AND deliver top class
IT services?

Surviving a recession is a tricky business and – done properly, sparingly – outsourcing might just be the magic ingredient. Because while the prosecution can reel off as many churlish negatives as he likes, the fact remains that there are at least as many reasons why shifting selected IT services to outside providers is a smart move.

For a kick off, it’s a powerful tool for identifying and homing in on core business processes whilst also removing the distractions and many of the associated costs of non-core activities – in turn promoting greater agility and competitiveness and boosting the business’s ability to react quickly and positively to changing market conditions.

It also helps strengthen bottom line by driving lower process costs and by providing on-demand access to external expertise – enhancing speed, quality, and innovation without the huge expense of extra headcount.

There are other, lesser known, more subtle benefits these days too. The usefulness of external services in diffusing change-resistant areas of the business, for example. Its value to both the IT function and the business itself in delivering better, more flexible, higher value services than internal sources can provide.

Better cross-process co-ordination, greater strategic flexibility, competency enhancement, ongoing operational cost reduction; product, relationship and process innovation,.. the list goes on.

The prosecution would have you believe that trusting external companies with your commercial crown jewels is a mistake.
He talks about managed service providers as if they’re all mercenaries; mean guns for hire that care nothing for your business and are just in it for a quick buck. Now, far be it from me to accuse my learned colleague of perjury, but this simply isn’t true. Many of these so called “mercenaries” have great people, great offerings, and great reputations – just check their client lists.

Then there’s the small matter of governance, risk, and compliance – get those wrong and it’s likely to cost you big time. So, to mix a heady metaphor, why not leave your worries at the door and let someone else carry the can if things go pear-like? At the very least it’s a case of a problem shared being a problem halved.

Outsourcing is by no means perfect, this much we concede. But that doesn’t make it a murderer… (sorry, scratch that, went a bit Perry Mason there for a minute).

Quite clearly, the business case for outsourcing is a sound one – which makes the case for the defence pretty compelling too. As such, the only possible verdict is one of not guilty.


The verdict? You decide.  Send your thoughts to iQ@uk.insight.com