The next big thing in outsourcing?

Samuels: in the past year, external service management has become messy, with value-seeking users selecting a range of contract types

Let us look back and yearn for the days when technology management was plain and simple ­ – you either managed systems in-house or outsourced technology to an external service provider.

Such simplicity is now very last millennium and technology leaders are bombarded with sourcing options. But which trends are simply created by hype-loving industry analysts and marketing specialists?

Well, to start with there was standard IT outsourcing, where non-core technology operations are managed by an external supplier.

The term IT outsourcing dates from the 1980s and was complemented in the mid-1990s by business process outsourcing, when users began to externally manage white-collar, management functions.

Then, a few years ago, technology leaders began to doubt long-term contracts with suppliers that were not always providing value for money.

Benchmarking led to contract cuts and the return of service provision in-house ­ – insourcing.

At the same time, suppliers from overseas started to offer deals to users that were looking to outsource IT and business processes.

For UK businesses, overseas contracts were either managed nearshore ­ – in Europe, for example ­ – or offshore, through an Indian or Chinese supplier.

And during the past year, external service management has become messy, with value-seeking users selecting a broad range of contract types from different providers.

This approach to provision has been widely termed multisourcing, which everyone says is the future of outsourcing, because users now need to be smart and ensure specialists are covering each part of the business. But you can guarantee multisourcing will be the next big thing in outsourcing… until something bigger comes along.

Forrester Research is already complicating ­ – or attempting to explain, depending on your point of view ­ – the sourcing mix by referring to the growth of “activist outsourcing” (forrester.computing.co.uk).

Here, users aim to boost IT performance by managing the full lifecycle of each supplier relationship.
In the end, many of the trends are merely different flavours of the same product ­ – outsourcing.

It is your decision whether such trends provide clarity or are simply used to push more products to users.

What do you think? Read Mark Samuels’ blog at: http://knowledge.computing.co.uk