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CIOs 'must consider two aspects of outsourcing'
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Chief information officers (CIOs) looking to outsource operations, such as storage, have two schools of thought to consider, according to one commentator. They must decide whether they simply want to cut costs or use outsourcing more innovatively in order to benefit their business, says Karl Flinders, deputy news editor of computerWeekly.com. "With recession looming, industry observers believe businesses will increasingly shy away from large transformational outsourcing projects and return to outsourcing as a way to reduce fixed costs," he states. However, Mr Flinders also warns that CIOs could find themselves in a dilemma as they try to balance pressure to save money with meeting the long-term goals of the business. Bob Scott, sales director at Capgemini, agrees, adding: "No doubt the main boards will put pressure on them to cut costs but they need to make short-term tactical decisions that keep the long-term strategy going in the right direction." He also states that outsourcing contracts will have to change in order to focus on savings while maintaining innovation. Another industry expert adds that firms must also consider the relationship they have with the supplier, as this can lead to savings and business progression. Robert Morgan, director at consultancy Hamilton Bailey, advises companies to allocate six per cent of their total budget for interfacing and managing suppliers. Figures from TPI reveal that firms are putting their outsourcing contracts on hold because of the current economic climate. They show that businesses across Europe, the Middle East and Africa signed 56 contracts totaling about 4.4 billion euros (£3.42 billion) in the third quarter of this year. However, the value of new outsourcing contracts in 2008 is predicted to be more than the 68 billion euros spent last year. Last week, US firm Remote Data Backup also stated that outsourcing IT activities can help cut operating costs. It commented that businesses spend time, money and resources on data storage without considering external document management. Azzurri is transforming the way organisations buy and use communications and information technology.  |
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