Long-gone are single-supplier deals, where a user trusted its systems with one service provider. More companies are now entering into multi-sourcing deals, where firms can benefit from the expertise of niche providers in specific business areas. How can chief information officers (CIOs) use external service provision to boost business?

Replies from the experts:

Outsourcing is never far off the radar for any CIO. It is a constant measure against which to benchmark your company, its skills, productivity and value. Firms which earlier outsourced everything to do with IT have mostly come to realise that they also outsourced the control and direction of a key part of their business model and they need to redress the balance.

It is essential first to understand your company’s future business needs for IT. Then you can assess which skills and activities you should retain and which could be outsourced. Keep hold of the strategy and direction of your IT.

Aim to retain business-facing skills such as project management and business analysis. Ensure you have a well-developed career path for staff and can offer them interesting, challenging projects.

Denise Plumpton, director of information, Highways Agency

Globalisation will continue to exert its influence over CIO sourcing strategy, and could take on new relevance as the economic climate cools. As well as the need to expand into new international markets, businesses stand to gain access to the lower-cost skilled labour pools that exist in the emerging economies and captive outsourcing arrangements offer genuine competitive advantage.

We know that 19 of the top 20 software companies have captive operations, with their own subsidiary software factories in India. And a new trend we expect to see develop among our members is the use of captive IT and business process outsourcing units.

GE Capital is perhaps the most successful example, but we can also point to Lehman Brothers and BA as companies that have developed approaches in this area.

Nick Kirkland, chief executive, CIO Connect

This is a topical question for me as I have recently taken 40 IT professionals to India to understand outsourcing and offshoring at a supplier’s site. One comment that summed up the general reaction was that “the real experience of the country, the culture, and the supplier campus and way of work could not be made anywhere else.”

Not every company can afford the financial and time investment to give such exposure to their IT professionals. However, the results emphasised the importance of covering the hard processes and skills as well as the soft values and cultural aspects. Both are needed for collaborative supplier relationships.

What the group took away was the need to build strategic and customer-facing skills, such as architecture and business analysis. They realised they must take ownership to ensure that requirements are being met, particularly with multiple suppliers.

Sharm Manwani, associate professor, Henley Management College

Multi-sourcing has been lauded as a way to avoid the risk of a single-supplier deal. In the construction industry, it is normal to look at what a project requires and to then create an alliance of companies, with each focused on their specialised area. This approach spreads operational risk, with the real advantage being access to the best-of-breed suppliers.

The obvious difficulties are that many IT suppliers are still not used to working in partnership with their competition. Multi-sourcing is not successful if people are squabbling over work, so not all suppliers are ready to work this way.

And do not forget that the more companies in the mix, the more complex it is to manage. There is a reason that some companies still prefer single-supplier sourcing.

Mark Kobayashi-Hillary, director, National Outsourcing Association

In a highly competitive business environment, IT chiefs outsource for two main reasons: to access specialist services or to take advantage of economies of scale when using skills that have become globally available.

CIOs concentrate on the areas of the IT operation that optimise efficiency or offer competitive advantage. These differ for every firm, but the objective of rapid response to business need is ubiquitous. It is just not viable for most to develop and keep that capability in-house. Multi-sourcing is the obvious answer.

Outsourcing will ­ and does ­ affect the profile of the IT department, but a career IT professional should view the change as an opportunity to learn new skills, take on new challenges and additional responsibilities ­ such as the management of outsource suppliers in their area of technical expertise.

Ollie Ross, head of research, The Corporate IT Forum

CIOs deploy outsourcing to drive down IT costs or improve performance ­ and in a recession, outsourcing has boomed. But the outsourcing market is changing, with new vendors and models emerging. The tie into the economy is not so clear.

Outsourcing is now an endemic part of the IT landscape, with simple cost-based outsourcing models evolving into mature, strongly governed and value-focused relationships. To benefit from new outsourcing frameworks and the vendors that use global delivery, CIOs must bring maturity and process discipline to IT sourcing.

Investing in a vendor management office, for example, ensures internal IT professionals work effectively with third-party service providers in a structured and measured way.

Strong lifecycle governance of the sourcing contract, alongside great communication, ensures business users are connected to IT strategy and solves the tensions internal technology professionals often face.

Euan Davis, senior analyst, Forrester Research