IS Outsourcing Transforming?

by Alan Guibord, TAC Founder

Recently Randy Mott stated that he was changing the outsourcing model at GM. I have been hearing similar suggestions from many of TAC’s clients as well. Clearly there are no hard savings from outsourcing, so companies have been looking for other justifications. Many like the variability of staff to help them control fixed costs, others use outsourcing as a means for replacing old applications with services. Whatever the reasons, firms are now taking a much harder look at their reasoning.

The cloud has enabled us to create a virtual model, where we can personally control resources. This was not available before. Being able to create this virtual base gives firms the capability to gain access to selective talents and services with minimal effort.

IT organizations clearly need to change their financial model, and introduce technologies and platforms that create more variability. At the same time, they need to migrate more effort to new initiatives rather than supporting existing ones. Most organizations spend 80% of their resources supporting existing resources. This will no longer be tolerated by the business. The cloud and other virtual services are the only way for IT to keep up with the ever changing demands and economic activity. TAC has been assisting several progressive organizations in their transformations. Interestingly enough, IT is supposed to be the innovators, and yet we have been the last to change. It is survival time.