What's Strategic About Outsourcing? - InformationWeek
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5/13/2005
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What's Strategic About Outsourcing?

The answer to that question could be: maybe not enough. Many companies remain fixed on focusing on the cost question, and perhaps not enough on the opportunity's value.

The answer to that question could be: maybe not enough. Many companies remain fixed on focusing on the cost question, and perhaps not enough on the opportunity's value.This idea came up in discussion recently with Michael Corbett, an expert in the field who earlier this year formed the International Association of Outsourcing Professionals. Its mission is to increase the success rate of outsourcing engagements of all types--manufacturing and IT being the two largest arenas--by focusing on issues such as process measurements against outcomes, and using research data to help establish standards and certifications for the industry. The group now claims more than 100 members.

"It's a $4 trillion industry and there's no professional association across all forms of outsourcing," says Corbett. And there's a need for more guidance to help companies achieve more from their outsourcing engagements. That involves seeing a services provider as more of a partner and source of ideas versus an order taker, and viewing the provider as a business asset and investing in that asset's development accordingly. It's not just the IT user organization that has to change its thinking, though--so do the providers, who have to become much more vertically aligned with their customers and more flexible internally so that they can constantly realign themselves to the changing needs of their customers.

Some companies are already adapting to the model, which should help boost the success rate of engagements. That's much needed, as estimates are that 50% to 60% of such engagements don't deliver the results users want. The question is, how long will it take the industry to more widely embrace the idea, and how well will it do it?

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