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Leader: Ancient reasons why outsourcing fails
What ancient Chinese military tactics and Greek philosophers can teach IT

By silicon.com

Published: Friday 22 April 2005

Outsourcing has often been presented as an opportunity for hard-pressed businesses to save money and get better service by handing all that tricky IT stuff over to the professionals.

So it was interesting to see a survey from consultant Deloitte which suggests many companies haven't got quite what they expected.

Most companies surveyed were disappointed that they hadn't managed to cut either costs or complexity. They were also hit with hidden costs and couldn't free up resources for new projects as they had hoped.

One in four were going so far as to bring operations back in-house.

And from the feedback we've had from readers so far, few of you are surprised – or shedding a tear for the outsourcers.

Recent research suggests it is not just the private sector that can't get outsourcing right, but that the public sector also has issues – especially with the level of trust between suppliers and clients.

Of course, outsourcing remains an inevitability for many companies – the dividing line between in-house staff, contractors and outsourced IT workers continues to blur, with many organisations using a combination of all three to get things done.

Even for those companies where technology is key, not all IT is equal. They might want to outsource the maintenance and save their own staff for development work. Or do it the other way round. So despite the problems with outsourcing, we're not likely to see everything come back in-house very soon.

So why do so many IT outsourcing projects fail to deliver the benefits that companies want?

Perhaps companies need to realise that just because a service is outsourced, it doesn't mean a company can forget everything about it – the relationship has to be managed and modified if the environment changes. If you outsource a problem you don't get rid of it – you just have to manage it at slightly longer range, which can mean a problem worsened.

Cost shouldn't be the only motivation behind outsourcing – especially if it is a service that is vital to your organisation. Would you want your supplier scrimping and cutting corners to make a margin because you've screwed the contract down tight? It might be attractive at first, but what if this means your service levels start to degrade?

But perhaps the important thing to do is understand your needs before you start and then explain it to your supplier. And understand what your suppliers can really deliver.

Of course, none of this is new – as Socrates would say, "Know thyself". Or as ancient Chinese general Sun Tzu would put it: "If you know neither the enemy nor yourself, you will succumb in every battle."

It might not be the newest idea – but it seems that many companies still don't do it. If you can't be honest with yourself about what you expect to get from outsourcing, how can your supplier ever get it right?