How much of IT should be outsourced?

As outsourcing has exploded in the last couple of years both in practice and mind share, many CIO’s have more questions than answers. For example:

  • What percentage of my IT organization should be outsourced?
  • How can I cut costs out of my organization while still delivery new capabilities to the business?
  • How can I consolidate the number of vendors I use today, and how many vendors should I work with?

As an outsourcing consultant, I grapple with this question every day. And every day, with each different client or application space, I come to different conclusions. It seems there is a lot of variability to the answer depending on a particular IT organizations process maturity, industry, country, technology platforms and availability of local talent. Yet, today as I was catching up on my reading of CIO magazine, which was discussing the next generation of IT, I challenged myself to come up with a “simple” answer. Below is my first attempt at designing the IT organization of the future, if I were the CIO. I’d enjoy getting any feedback you might have on this idea.
Responsible for overall IT strategy and operations. This role and supporting team would provide overall leadership and direction.
Architects & Program Management
Managing the needs of the business and the resource bandwidth would primarily be executed by the outsourcing partner that would bring deep program and project management experience. Continuous evaluation of the IT operations technology platforms and future design would then fall primarily on employee architects that would feel ownership of their companies direction and capabilities. The outsourcing partner would then supplement with technology specific architects as needed.
Business & Systems Analysts
Driving the next generation of IT will require more business focused IT workers identifying and designing new ways to do business and generate top-line growth. The outsourcing vendor would provide support in methodology and domain or application specific experts that could rotate in and out to bring industry best practices from other clients.
Developers, Testers and Support Operations
Majority of workforce can be managed more effectively and less costly by a vendor with centralized development centers. Entry level employees would work with the vendor initially to build foundational skills for future roles.

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