Industry veteran Max Goldsmith, CEO of XSI, has strong views on outsourcing. While he admits to making some wild predictions, he reckons that within the next four years big-ticket outsourcing will disappear. Where it persists, he claims, is where it is too hard to reverse earlier decisions.
Why will it disappear? Because the value just isn’t there once customers lose bargaining power and get locked in with big providers and their technology partners. I’m not sure I totally agree, especially after considering examples such as Wesfarmers’ Energy Division where suppliers of products and services seem to be kept on a tight leash within a cordial relationship.
Obviously, Goldsmith’s views are coloured by the fact that as one of the small players (by comparison with the big multinationals), XSI suffered when signing up with the big vendors for outsourcing across the board was the only thing to do. This was especially true in Canberra, where XSI (or its parts — from the e-DataGroup including Dawn Technologies and Digital Tape Solutions) and predecessors saw a solid Canberra business dwindle to almost nothing. Cluster-bound IT directors couldn’t shop around any more and local companies got crumbs, Goldsmith said. That Canberra business had included the Department of Health. However, according to Goldsmith, with the break up of the cluster arrangements his Canberra business is now back up to about $1.5 million a year and he is expecting it to hit $3 million next year. A trend in shopping around?
By the way, XSI’s technical manager Ron Irving raves about FalconStor — a storage management appliance which he claims is usable after only a fraction of the training time required by rival products. Users are said to include Standards Australia.
Yes, I’m aware I’ve just given Australian-owned XSI a free kick at the big players. So if you’re a provider of outsourcing services and want to argue the merits of your value proposition, then please do. I’ll run your guest column in the space opposite.