Australian organizations face sourcing dilemma

Australian organizations are ignoring a broad range of IT sourcing skills favouring the two extremes of either totally outsourcing or insourcing.

While selective sourcing has started to emerge in recent years, Phoenix Consulting NSW principal Leon Fertman said this trend is uniquely Australian as our North American and European counterparts tend to rely on a broader mix when it comes to sourcing IT skills.

However, Fertman admits US companies are forced to use a variety of mechanisms because of the sheer size of these companies which means total outsourcing isn't an option.

He said using several source channels, from offshoring to India or near-shoring to neighbouring countries, allows an organization to successfully cope with financial peaks and troughs.

While Fertman believes Australian organizations are less inclined to innovate, there has been some experimentation in the past decade that led to a number of high profile disasters.

One example is whole of government outsourcing by the federal government in the late 1990s.

Despite this, Fertman said innovative sourcing strategies can save costs and improve competitiveness.

He said high levels of offshoring by local companies is being held back by the conservatism of the Australian economy and industry coupled with negative perceptions about offshoring including security fears.

To get the mix right, Fertman said companies need to balance cost, deliver business alignment and retain core IT and business competencies within the organization.

Meta Group program director for enterprise planning and architecture strategies Deborah Weiss believes local companies are moving away from the two extremes and currently favouring selective sourcing.

Weiss said selective sourcing has gained popularity in the past two years and there are a number of large organizations planning to review their options over the next 12 months.

She said these organizations are likely to combine a number of sourcing methods.

The ranges of services being offered by vendors, she said, are also impacting IT skills sourcing strategies.

"We're seeing a move away from the big providers to more specialised providers," Weiss said.

"A lot of vendors are working in particular areas of expertize, and a lot of the bigger vendors are dividing up their offerings.

"Vendors want to be able to offer greater intimacy and relationship building as part of the service."

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