Is IT Outsourcing Worth It?

Outsourcing is the lifeblood of IT. The prevailing theory is that outsourcing saves companies money and enables them to engage a broader pool of IT skills and talent than they could in-house. However, the results from a new survey challenge that perception.

Lieberman Software surveyed IT professionals at the InfoSecurity Europe 2012 conference and found that 71 percent of organizations outsource a “significant portion” of their IT needs. However, confidence in outsourcing is not as high as you’d think.

Although outsourcing is often seen as a cost-cutting measure, 42 percent of the survey respondents reported that outsourced projects ended up costing more than originally planned—16 percent claimed the costs were “significantly more”. That doesn’t necessarily mean that it was more expensive than hiring, training, and retaining in-house talent for the same project, but it still reflects poorly on IT outsourcing in general.

More concerning than cost is quality and trust. A third of those surveyed believe the quality of work performed by IT outsourcing consultants is lower than work by in-house employees, and 64 percent feel that their outsourcing partners invent work to artificially inflate costs. It is difficult to build a working relationship with a third-party company if you question its quality and integrity.

Philip Lieberman, President and CEO of Lieberman Software, says the survey results illustrate that the grass is not always greener on the other side of the IT outsourcing fence. “The fact that trust in the quality of work is being eroded is a worrying trend but, for me, the thought that work is being manufactured to inflate fees is even more of a concern.”

Some IT projects need to be outsourced. Organizations–especially small and medium businesses (SMBs)–simply don’t have the budget to hire IT staff capable of managing any and all IT projects. Some projects require specific skills, and outsourcing is a solution that allows an organization to hire the best talent available only for as long as it’s actually needed.

The survey results highlight some outsourcing concerns, but they don’t mean you should avoid outsourcing altogether. You just need to be aware of the issues, and put in the due diligence to forge relationships with quality organizations you can trust.

Cost isn’t everything. Look beyond the bottom line to ensure that your outsource partners are reliable and trustworthy. Choose organizations that respect the need for transparency, and that take the time to understand your IT needs.

If you have to micro-manage your outsource partners, it’s time to find someone else. You have better things to do with your time.