Developments in Practice XIV: IT Sourcing - How Far Can You Go?

Outsourcing is now a widely accepted part of dong business. What started as a mechanism to lower costs is now an integral part of a much larger IT strategy. Today, newer forms of outsourcing are on the horizon and newer approaches that will change yet again how IT sourcing decisions are made. Better connectivity, the availability of high quality staff, and much lower costs in other countries are shifting sourcing markets and expanding sourcing possibilities for companies. To examine how sourcing is changing in IT organizations, the authors convened a focus group of senior IT managers from a variety of companies. This paper explores the evolution of sourcing and how sourcing strategies are shifting. Then it looks at emerging sourcing models and particularly at offshore/nearshore outsourcing. Finally, it identifies critical factors for successful sourcing. The paper concludes that while sourcing is changing the nature of the work that is done internally in IT, it is unlikely that it will eliminate this function altogether or reduce the its value to that of a utility. To the contrary, more and more organizations will need the systems thinking, architectural understanding, and strategic awareness embodied in a modern IT department to ensure that they don’t end up with a hollow shell of an organization which provides limited added value to the marketplace.