Elizabeth Sparrow, chair of the BCS Working Party on Offshore Outsourcing and author of the BCS book, A Guide to Global Sourcing (2004), Computing 9 December 2004

We stand on the cusp of a new era in IT globalization.

Offshoring is not new - multinational companies have employed overseas IT workers for more than a decade. But the growing trend of integrating offshore resources into IT projects and operations is becoming a mainstream activity.

The question we need to ask ourselves is not so much should we go offshore but how can we best combine onshore, near-shore and offshore services to produce the best fit for our organisation's requirements.

The challenge for us as UK IT professionals will be to exploit the advantages that the new global delivery models offer to best effect.

In his speech to the CBI annual conference on 9th November, the Chancellor of the Exchequer, Gordon Brown, spoke of the need for all UK companies to face up to the far reaching and fundamental global changes in technology and trading patterns, 'In a global restructuring that focuses advanced industrial nations away from low skill, low tech products and processes to the technology driven and high value added, Britain will not only have to be enterprising but will only have a competitive edge if we develop the most technologically intensive and science based industries and services.'

More than ever companies need to devise a sourcing strategy to drive decisions about IT service acquisition.

This is not a simple choice between keeping functions in-house or outsourcing - or maintaining operations in the UK or moving them overseas.

A rich, and sometimes complex, mix of business models is emerging. Services retained in-house can still be provided offshore from captive sites or through foreign company acquisition.

Shared service centres, joint ventures and alliances can combine onshore and offshore working. And offshore services can be bought direct from offshore suppliers or via multinational service providers who operate development centres around the globe.

An effective sourcing strategy provides sustainable competitive advantage and needs to cover five key factors:

  • Corporate objectives: The sourcing strategy should reflect your company's current and future business priorities and aspirations.
  • Corporate values and attitudes to risk: Some organisations believe that outsourcing enables them to focus on their core objectives, while other companies are committed to keeping all IT activities in-house. Both may choose to use offshore resources, but they will adopt different business models. Hence, Thames Water outsources to Wipro but Tesco chooses to run its own IT support centre in Bangalore. Risk adverse companies usually prefer to outsource to an established UK-based service provider. Britannia Airways chose LogicaCMG because an effective outsourcing relationship had already been established and LogicaCMG were able to offer a hybrid model combining onshore and offshore working.
  • An analysis of IT services, indicating preferred methods of supply. This needs to take into account the degree to which each service offers competitive advantage, the technical expertise already available in-house and the track record and maturity of the global IT services industry.
  • Alignment with IT strategy: The sourcing strategy should support implementation of corporate technical architecture standards, the data storage strategy, business continuity policies, project management standards and security policies.
  • Governance structures, defining arrangements for monitoring implementation of the sourcing strategy, reviewing progress and agreeing modifications as the global IT services market develops and business imperatives change.

Increased globalization opens up new opportunities and new challenges. IT service options continue to evolve and the offshore industry looks set to continue its rapid growth.

IT professionals are uniquely placed to help their companies get the best from the new service delivery models. But we will need to develop the skills and expertise needed to devise an effective sourcing strategy and manage services supported by global resources.

Increased international competition, the global IT services industry, shifts in added value and automation will all affect the work of IT professionals in the future. Now is the time to review your skills and make sure you are ready for the future.