Monday, June 15, 2009

Does Outsourcing create value ?

Last week I participated in a sponsored group discussion which discussed outsourcing in the Indian context and the value it brings to the Indian CIO. It was an interesting debate with CIOs from multiple industries airing their viewpoints on subjects ranging from data center outsourcing to total outsourcing and everything in between like infrastructure, helpdesk and maintenance etc. Across the spectrum, the conclusions were not what the sponsors hoped for, but when you have a dozen bright minds together, it's unlikely that a consensus can be reached.

It was indeed evident that outsourcing is being scrutinized carefully by every enterprise in current times of tight budgets. A minority had significant outsourcing initiatives while the rest had the tactical operational stuff being done by external agencies. Reality being that outsourcing does not provide the Indian CIO a cost benefit, but helps manage variable demand and induct skills that may be hard to come by.

TCO & ROI are a way of life with ROI still remaining elusive; and the model varies by company and industry. The favorite buzzwords of IT and the consultants are passe, everyone has already done the virtualization, consolidation, renegotiation, while SOA, Clouds and SaaS and its variants are of limited value.

So future of outsourcing in India remains tactical to a large extent, big deals will be far and few, it's about creating short-term value, compromising at some level on what you cannot foresee.