The Future of Outsourcing?

Few people in or around the computer industry would be surprised at the scale and reach of outsourcing in the UK economy and the part played by the outsourcing of IT.

One great advantage of meetings held under the ‘Chatham House rule‘, is that participants can play with half-formed ideas, safe from being attributed. The insights from creating that ‘playful’ space, for me, are often the pointers to the limits to today’s consensus.

Recently, I was at such a meeting with some significant users of outsourcing, discussing cloud computing. The meeting revolved around an interesting question:

‘Looking back on 20 years of IT outsourcing, what would you like to know about cloud computing to maximise the opportunity and avoid past mistakes?’

Try it for yourself, I found it very revealing.

The litany of mistakes and the emotion attached to them is not to be ignored in my opinion.

I want to focus on one of the issues alone, the ‘exit strategy’.

The lesson was that many organisations felt they had got the scope of outsourcing contracts wrong and been tied in by inflexible contracts that no longer met their needs. They had become dependent on suppliers and that transitional costs to new arrangements had eroded the expected benefits of outsourcing.

So, what is the exit strategy in cloud computing? What are the transitional arrangements?

Now comes the fun! Can you clearly describe Cloud 2.0 or Cloud 2020?

For organisations looking towards the end of existing contracts and facing new 7 to 10 year deals this is quite important, if forecasts of the growth of cloud computing are to be believed and realised.

My overall impression from the day was that enterprise cloud computing could falter through a lack of trust between users and suppliers because of the dangers of not addressing the lessons from the history of outsourcing.

Broadening out from that discussion, there is a clear danger for the IT supply-side. Cloud computing could just become about commoditisation and utility. If so, the IT industry in the UK could be a lot smaller in 2020 than it is now.

For over 40 years IT as a career has been an area of jobs growth. It has created a dynamic of change and innovation. Have we reached the limit or can we innovate in new growth areas?

Where trust is high, the possibilities are endless. Where trust is in short supply, the barriers are hard to breach.

Remember, past performance is not a guide to future performance.

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About the author
Chris is a technology and policy futurologist. Chris has been in the IT industry since 1980. His roles have spanned Honeywell, ICL, HP, Microsoft and Capgemini. He is a Fellow of the BCS and a Fellow of the RSA.

See all posts by Chris Yapp

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December 2017
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