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Cutter Consortium, February 29, 2000

73% Of Companies Outsourcing Part Of I.T.

By Cutter Consortium

According to preliminary results from an outsourcing study conducted by Cutter Consortium, 73% of companies surveyed outsource some part of their IT services. When asked which aspects of IT are outsourced, the top five areas were:

When asked to compare the amount of IT activities outsourced one year ago to the current amount, 50% said their companies are currently outsourcing more than they did a year ago. The top two reasons for increased outsourcing were: satisfaction with a previous outsourcing experience (21%) and scarcity of qualified personnel (20%).

Michael Mah is a senior consultant on Cutter Consortium's Sourcing Advisory Service and the editor of IT Metrics Strategies He is also presenting a keynote address on Outsourcing at Cutter Consortium's Summit 2000 on 10 April in Boston, Massachusetts.

Says Mah, "Companies want to reduce costs on legacy maintenance and redeploy assets to new applications development to enter new markets. Many companies are looking to access skills by buying them instead of 'growing them organically.' In many cases, companies also see an outsource provider as being able to help them speed process improvement. Whether this is the case ultimately depends on if an organization executes an effective metrics strategy to manage the contract and the service levels via a balanced scorecard."

Mah continues, "Speed to market also seems to be a critical factor. The need to have an e-commerce offering, take advantage of deregulation, or capitalize on the reduced trade barriers all require speed to market as a key ingredient. Companies cannot grow or transform their IT capabilities to support changing business needs. Therefore, the strategy of outsourcing is very effective in achieving the speed to market many organizations need. If you cannot operate at Internet speed, you get left behind!"

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