A new survey from Lieberman Software Corporation, taken at the recent Infosecurity Europe 2011 event in London and mirrored at RSA Conference 2011 in San Francisco, shows that the relationship between many outsourcing companies and their clients is at a breaking point. According to the survey, an astonishing 77% of IT professionals who work in organisations that use outsourcing say their outsourcers have “…made up…” work in order to earn extra money.
The survey reveals that 43% of IT professionals work in organizations that have outsourced a significant portion of their IT. Larger organizations are more likely to have outsourced IT – with 55% of respondents at organizations having more than 1,000 employees replying that they utilize outsourcers, versus 30% at organizations with less than 1,000 employees.
However, the shock comes as 62% of respondents said that, compared to their original plans, their outsourcing agreements had cost them more than anticipated while only 11% said they paid less than they originally expected. Perhaps most surprisingly, fully 27% of participants said that their outsourcing agreements had cost “…significantly more than planned”.
According to Philip Lieberman, President and CEO of Lieberman Software, this should be no surprise to those who have put their faith in the hands of the outsourcing industry: “Fundamentally, IT outsourcing has been an exercise in reducing expenses and passing along HR issues to others. The unfortunate by-product of this quest for lower costs and fewer headaches is a situation where corporate collective knowledge, as well as loyalty and intellectual talent, has been lost.”
“Once upon a time, IT was seen as the lever arm of the company – a group that could use technology to make the organization more competitive, exciting and different in the marketplace. Industry analysts and consultants in the area of business process management came up with the idea that every job could be fully described and therefore outsourced to the lowest bidder.”
“Given that the advice came from a ‘credible source’ these executives were able to achieve remarkable reductions in cost and liability for a while, until business challenges began to appear that required flexibility, corporate knowledge, and dedication to the company. The experts never considered dedication and loyalty as elements in their ‘process reengineering’ – it was deemed as not quantifiable.”
“In the area of security, we are always faced with new threats and the need to evaluate and deploy new technologies and processes to keep one step ahead of criminals and hackers. In this role we are rarely able to predict or totally codify our needs or actions in advance.
What I see today, and what this survey confirms, is that many organizations are growing frustrated with IT departments that consist largely of outsourced employees who come and go at the whim of outsiders. If organizations are going to outsource IT they must measure their outsourcers’ performance across the appropriate set of criteria – not only cost, but resiliency, transparency and data security,” Lieberman said.