Outsourcing is an apparently simple concept, defined as obtaining goods or services from an outside supplier. Organizations outsource services for many reasons, including:
- Access to best of breed capabilities
- Lower costs
- Access to scalable resources
- A strategic decision to focus on core business competencies
- To change the balance between capital and operational expenditure
To achieve maximum value from outsourcing, organizations need to choose their suppliers carefully, and manage them once the contract is in place.
A shift to in-house?
Many organizations now have a complex sourcing environment, with multiple suppliers offering a range of different services. This complexity has led to the growth in adoption of service integration and management (SIAM), a management methodology that delivers maximum value in a multi-supplier environment.
Anecdotal evidence from the SIAM marketplace suggest many organizations are moving away from outsourcing the service integrator role in their SIAM ecosystem. Instead, they are choosing the build the capability internally and take full control of their own sourcing network.
This reflects a shift in the wider outsourcing market. Growth in the IT outsourcing industry slowed in 2016 and could fall to less than 2 percent by 2019.
There are several reasons for this shift towards in-house capabilities. They include:
- A ‘wait and see’ approach based on recent world events like Brexit and the election of Donald Trump with the possible associated shift in US economic strategy
- A desire to have more control of risks, and intellectual property
- Increased use of automation to carry out simple tasks that might previously have been outsourced
Time for a review
So, what does this mean for your organization? Business is about more than just following the latest trends, but it could be time to review your own sourcing strategy. If you don’t review your strategy regularly, now is a good time to start, and to create a good business habit.
Some key things to consider are:
- Is your current strategy working for you?
- Are all your suppliers and contracts effective?
- Are any elements of your strategy now redundant?
- How will your strategy support your business plans for the next 1, 3 and 5 years?
Outsourcing can be an extremely effective tool for your business, but like all tools it needs to be looked after to stay productive.
If you need help with your outsourcing strategy, why not let our eConsultants get you started? Our strategy setting package will give you an objective perspective from some of the world’s best IT management consultants.
