Can You Save Money Outsourcing IT?
Publishing executives often ask themselves, "Could I save money if I outsourced our IT functions?" This is not an easy question to answer. Outsourcing was first identified as an IT business strategy in 1989 when Eastman Kodak outsourced all of its information technology systems. Since then, many organizations began considering outsourcing as a way to cut expenses. Decisions were based on cost and whether a service was core to the business. However, the issue is much more complicated.
The idea of outsourcing noncore functions like IT is not a new concept. Publishers purchase printing, circulation and fulfillment services. HR services like payroll and health care are typically contracted out to third parties. Very few companies write and maintain their own financial systems, and almost everyone buys network and telecommunication services. Many Web sites are hosted on third-party hosting platforms. These are all forms of outsourcing.
Yet, many publishing organizations still have sizable finance, HR and IT departments. Why? Most executives will tell you that a certain number of roles and services are critical to the business and cannot be outsourced. What they are really saying is that some functions and services are not commodities to be purchased.
This is the heart of the outsourcing discussion. The question is not which functions are "core" or "critical" to the business, but rather, which functions are commodities that could be purchased from an outside vendor?
Some technology functions have matured to the point where they could be considered commodities. For example, software development drove the growth of India-based outsourcing services. Help desk support has matured to the point where everyone provides the service using common business processes. As companies build managed desktop environments, they, too, will be based on a common core process. That's a commodity.
Today, few companies in any industry outsource their entire IT functions. So, the question really is, "What is the right mix?"