Take 5, March 25, 2011

The five most important pieces of information on outsourcing that I have found this week in my travels through the web.

 Outsourcing’s Relentless March: Gartner predicts that the rise of cloud computing, virtualization, and mobile devices not only will drive many firms to relinquish the commodity support functions that consume many IT resources, but also will force them to migrate to a model in which external providers own and support the entire infrastructure.

 Outsourcing’s Relentless March (more):  The CIO Executive Board goes a step further in its predictions for these factory IT functions; in its report “The Future of Corporate IT,” it predicts that when the wave of outsourcing, cloud computing, and virtualization has achieved its full potential, fewer than 25% of the current IT workforce will remain in their present roles!

 Some Numbers That May Be of Interest: According to Computer Economics, the typical IT organization spends about 5-6% of its total IT budget on contracted services with an external provider. 23% of IT organizations outsource help-desk functions, 21% outsource desktop support, and 27% contract with an external provider to maintain existing applications.

 Outsourcing Deals Getting Smaller: Outsourcing specialist boutique TPI also notes that the average value of an outsourcing deal has dropped from $360M US in 2000 to around $100M US in 2010.

 Outsourcing Strategy Discussion: Rob Aalders, Director at Transformation Analytics and the author of The IT Outsourcing Guide, advises firms considering outsourcing to think through their motives at four levels:

1. Goals: the macro-level business results we hope to achieve

2. Objectives: the granular outcomes we expect

3. Critical success factors: the elements that have the most leverage and that we intend to  focus on in our measurement of outsourced outcomes

4. Criteria: the attributes we expect our outsourced partner to bring to the relationship