Leader: Outsourcing not for everyone

Outsourcing has long been a mainstream business tool used by organisations primarily as a cost-cutting device. Yet the effectiveness of handing over management of a company's entire IT operation to a private sector supplier is still an issue that divides opinion in the industry.

The question of simply whether outsourcing works split silicon.com's CIO Jury user panel this week, although IT bosses in favour just outnumbered those against. Two separate surveys this week have also come to different conclusions on outsourcing.

A study of public sector IT managers by local authority user body Socitm found that councils which outsourced their IT don't perform as well as those running it in-house. Yet research by a US consultancy found that despite one in five outsourcing deals being terminated, the vast majority of IT directors were happy with the results of their outsourcing projects.

The common theme here is that outsourcing is reaching a stage of maturity on both the buyer and supplier sides. The days of someone trying to make a name for themselves in the company by outsourcing the entire IT department in one big bang have pretty much disappeared.

Outsourcing is now used more sparingly as a strategic tool for non-core activities to cut costs and free up internal resources for more important work.

Offshoring is also becoming an increasingly mainstream part of the outsourcing toolkit but this also has to be used wisely and carefully to avoid embarrassing and high-profile disasters. Just last night, BT chief Ben Verwaayen jumped on the bandwagon, praising the development and innovation of offshore locations such as China and India as "better and cheaper" than their western competitors.

Still, outsourcing is not for everyone. One IT boss on silicon.com's CIO Jury said he had tried it, didn't like it and ended up saving money by bringing the work back in-house.

Another issue to consider: the decision to outsource will also almost certainly cause problems in employer-employee relations and the threat of strike action has loomed over several recent outsourcing deals.

And that, ultimately, is why outsourcing will continue to divide opinion for many years to come.