In defense of CIO’s who outsource

Francois Lafortune

CIO : IT Leader

1 Response

  1. Dean Webb says:

    “Shareholder value”: code words for externalizing costs and risks, damn the long-term consequences. I’ve seen the impact of handing over IT functions to staff that have no direct stake in productivity, performance, or customer satisfaction. The contract with the outsourcer may look fine to everyone at the table, but in practice, there may be charging structures that the outsourcer is clever enough to include that eluded the savvy of the customer’s purchasing and legal teams. Even worse, what if the outsourcer also owns the intellectual property associated with design and architecture work? That means, terminate the relationship and the outsourcer takes all his toys with him, leaving the customer at substantial risk for maintaining business continuity.

    Then there’s the matter of the outsourcing staff actually being made up of sufficient quality to handle operations. It’s a race to the bottom with wages – all hail the shareholder value! – and that means the dirty secrets of forged resumes and cheated credentials plague the staff hired for the contract. And, again, what incentive do they have to be proactive about anything? They’re like sign painters that don’t correct a customer’s grammar: why bother if the customer doesn’t care and if the customer does care, then the sign painter gets to paint another sign because, after all, the customer did pass off and accept the bad grammar on the first sign and is therefore responsible.

    Why all these caveats? Because in a world of externalizing costs and risks for “shareholder value”, that outsourcer is trying to do the exact same things to its customers. It has massive incentives to pass those risks and costs right back to the customer, after extracting its own profits from the deal.

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