CIO Jury: Does outsourcing work?

Leading UK IT chiefs believe outsourcing is effective, despite a recent report which suggests organisations that keep it in-house perform better.

Another report this week also found that one in five outsourcing deals is terminated due to poor performance. So we asked our silicon.com CIO Jury user panel of IT bosses if outsourcing does deliver.

The question split the CIO Jury with seven saying 'yes' outsourcing does work and five saying 'no', although those who said yes did so with important caveats.

Tony Johnson, IT director at Virgin Megastores, said outsourcing needs to be carefully targeted at non-core activities while Hugo Smith, IT director at Sporting Index, said a "strategic sourcing" mix of in-house and outsourcing always works best.

Outsourcing for the right reasons is also a key factor in success or failure, according to Ric Francis, executive director of operations at the Post Office.

"Do not outsource a failure as it will become an even more expensive failure and ensure that the right motivations are in place from all parties to make the arrangements work. Mutual benefits are a must - i.e. don't screw the costs down so tight that the outsourcer cannot make a living," he said.

Chris Broad, head of IT at the UKAEA, agree. "Outsourcing works if you are selective. You should not outsource a problem and you can't outsource risk," he said.

Frank Coyle, IT director at John Menzies Distribution, warned of the consequences of not using outsourcing selectively and intelligently.

"The disasters occur, typically, when an accountant somewhere tries to make a name for themselves by convincing the board to outsource the whole department, thus, losing control of a critical business area. The problem then becomes one of trying to get the genie back into the bottle - not so easy," he said.

Steve Ritchie, CIO at Investcorp, said: "Does outsourcing deliver cost savings? Sometimes. Does it improve customer service? Sometimes. Does it consistently deliver both? Almost certainly not."

But others were strongly against outsourcing. Dr Stuart Brough, head of IT at the University of Strathclyde, cited the loss of flexibility and control as well as a reduction in the quality of service as key factors.

Rob Neil, head of ICT at Ashford Borough Council, simply spoke from experience. "We've tried it, didn't like it and saved money as well by in-sourcing," he said.

Today's CIO Jury was...

Chris Broad, head of IT, UKAEA
Dr Stuart Brough, head of IT, University of Strathclyde
Alan Brown, head of IM & technology, West London Mental Health Trust
Frank Coyle, IT director, John Menzies Distribution
Ken Davis, head of IT, Five
Ric Francis, executive director of operations, Post Office
Tony Johnson, IT director, Virgin Megastores
Rob Neil, head of ICT, Ashford Borough Council
Sean Powley, head of ICT, London Borough of Barnet
Steve Ritchie, CIO, Investcorp
Peter Ryder, head of ICT, Preston City Council
Hugo Smith, IT director, Sporting Index

If you are a CIO, IT director or equivalent at a large or small company in the private or public sector and want to be part of silicon.com's CIO Jury pool, or you know an IT chief who should be, then drop us a line at editorial@silicon.com