Is outsourcing too expensive?

The cost of outsourcing is still too high for smaller businesses, many of which are reluctant to put outsiders in charge of their IT systems.

A Datamonitor survey of 500 UK SMEs (companies with 10 to 100 employees) found that while outsourcing may have advantages such as freeing up employees to work on other business issues, only 25 per cent of smaller businesses have embraced it.

Almost 60 per cent of the SMEs surveyed said they can never imagine their IT function will be fully outsourced.

Skills Survey 2007: the results

Find out from this year's Skills Survey:

♦  Are CIOs getting less cash?
♦ How the staffing crisis is deepening
♦ How techie salaries are faring

Customer service and quality of service are the top priorities for SMEs when selecting an IT vendor, and the businesses that responded to the survey said they are more likely to choose a national ISP or telecoms provider for managed services, with local or specialist providers being their last choice.

With the exception of telephone and mobile comms, there is no dominant IT supplier for SMEs. For example, when asked to name their current supplier for network services, more than 100 different vendors were mentioned, the analyst group found. The exceptions are telephone and mobile telephone solutions - more than 70 per cent of the SMEs purchase their telephone services from BT, and it is also the most popular supplier for network services and managed server hosting.

Datamonitor technology analyst Aphrodite Brinsmead said SMEs are unaware of the outsourcing options available and this may stem from vendors having previously overlooked the SME space.