Outsourcing on the up for 2010, but companies want better deals

The National Outsourcing Association (NOA) reports this week that the majority of businesses already using IT outsourcing are planning to outsource more this year. 60% of businesses polled by NOA intend to outsource more IT than they currently do.

The financial sector is most comfortable with using outsourcing. Here at Inatech we can vouch for that; financial organisations have been leading the way in IT demands, and our implementation of new Oracle software for Dubai Bank was just one of the great steps in outsourcing for better financial technology in the sector.

With this greater demand for outsourcing, however, comes greater competition. As firms catch on to the cost-effectiveness of competent outsourcing, they become open to more and better opportunities, and begin to look for even better deals. Businesses in NOA’s survey have said that they want to cut at least 15% from their current outsourcing costs.

Part of this is the effects of the recession; before the economic downturn, companies were only looking for a 10% saving. Having said that, it is also a sign that outsourcing is becoming the preferred method of IT management. This is not all positive, according to NOA chairman Martyn Hart.

"Outsourcing has traditionally been seen as a cost saving mechanism for business, so during the torrid 2009, it is not surprising that interest in outsourcing is continuing to grow.

“However, continued focus on cost above everything else means that many are pushing through higher-volume, low-cost contracts over shorter time frames. This short-termism can be dangerous and these kinds of contracts frequently fail.

"That said, it looks like suppliers still have some work to do to ensure they are fully catering for what users want in 2010. This is likely to be an ongoing issue as users continue to seek new cost savings from less-mature providers and locations around the world."

As companies look for ever-cheaper IT solutions, they are more likely to choose providers with unrealisticly low costs and turn-around times. We recommend finding a service provider with a tried-and-tested track record of service delivery as well as a good turn-around time. Remember, you are not just paying for time when outsourcing; you are paying for skill, expertise and responsibility.