CIOs grapple with outsourcing choices

As companies restructure and change strategies to cope with budgetary pressures, analysts are betting chief information officers (CIOs) will increasingly turn to outsourcing to ease pressures.

However, not all Australian CIOs are thinking this way.

Geoff Lindner, CIO for Powertel, said even though his company is "open" to outsourcing, he does not foresee core business processes being outsourced.

"There is a substantial internal benefit for people to enable processes internally. If you outsource the IT department you are really putting your core knowledge elsewhere."

However, Yankee Group analyst Andy Efstathiou warns against this perception.

He said as the CIO's job "isn't getting easier", CIOs and other high-level IT managers must discard the notion that a company should only outsource processes that are unrelated to its core business.

"This oversimplistic rule of thumb misses the point," Efstathiou saidOutsourcing isn't about parsing out core and non-core processes, but rather about improving operations in a continuously evolving business environment, he said.

"All business processes are on the table for outsourcing and, under the right circumstances, [any] should be outsourced."

Lindner said his company has looked at outsourcing their desktop, helpdesk and datacentre, but on each occasion the "numbers did not compute".

"With the datacentre, we found outsourcing would not give us efficiency of service. Perhaps if the business needed IT 24 hours a day it would be different."

Rather, Lindner adheres to a philosophy that it is best to get the smallest set of IT internally and keep people as "liquid" as possible.

"People need to be multiskilled, but have the multiskilling as small as possible. If you have a unique solution to every problem, then you will require a large IT team."

Despite the differing opinions, outsourcing continues to grow in Australia. According to IDC, the Australian IS outsourcing market experienced a 29 per cent growth in 2001.

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