Quality improves as outsourcing grows

In nearly all organisations across every sector of the market, outsourcing is an issue that soon crops up when questions are asked about how companies are coping with budget cuts.

Regardless of the controversy surrounding the topic, especially when offshore workers are seen to be replacing local jobs, it has become a fact of life for many chief information officers (CIOs).

The annual Harvey Nash market survey of CIO/IT directors provides some insights into the current use of outsourcing, and the figures seem to reflect a certain amount of maturity in the market.

Growth is starting to slow slightly for the first time, while the quality of service delivery has increased compared with previous years.

According to the survey, 99 per cent of participants engage in some kind of outsourcing activity. However, two-thirds of the companies polled said that it accounted for only 30 per cent of the budget or less, with an average of 23 per cent.

In a notable change, the number of companies expecting to spend more on outsourcing in the next year decreased for the first time, dropping to 38 per cent this year compared with 48 per cent in 2001.

As has been seen in the software market, the drop-off in steep growth has corresponded with an improvement in quality. This year, 61 per cent of firms say that outsourcing has met their expectations, up from 52 per cent in the previous year.

Most outsourcing goes to local IT services firms, with more than 80 per cent of respondents not going offshore at all. However, nearly 90 per cent of those that did go offshore expect to spend more on this in the future.

This indicates that companies which do engage in offshore outsourcing seem to find it a positive experience.

Of those already using this service, 70 per cent have found their expectations met. That said, a significant 26 per cent did not receive the service they had hoped for, indicating that firms need to manage their outsourcing relationship very closely.