Outsourcing

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Outsourcing

OSI Model

This is the 101 of computing and can be remembered with the phrase "Please do not throw sausage pizza away"

osi model

Evolution of Outsourcing

Outsourcing has always been for 95% of all companies  mandatory at the lower part of the OSI model with few but all the largest companies owning their own physical network, however in the last 10 years this has accelerated to all levels across the whole IT landscape being outsourced. This is on the basis that IT is no longer core to the business than facilities management, power or legal services. The other key driver to outsourcing has been cost where companies e.g. BAA (2010) have seen considerable cost saving to outsourcing the entire OSI model. With the increasing complexity of IT even medium size companies cannot afford to retain the separate skills needed in all these layers. An example is SAP in itself can support a team of 10-15 professionals with its core modules. Therefore is basic economies of scale that these skills are centralised and service a range of companies rather than in individual IT department.
There are exceptions to this trend but they are beginning to be much rarer, this is when the rate of change in a business results in a competitve advantage of investing in an inhouse IT function. This highlights the relationship between change, processes and IT. Some comapnies may have evolved with poor internal processes and therefore retain an a reactive IT department  in-house as these would be prohibitive to outsource with a commercial agreement that pre-suposes some degree of internal processes.
Even though outsourcing is very mature, global procurement deals with companies as large as HP, IBM, BT Global Services and Tata are still difficult, this is because the legal structures do not extend across national boundries and these companies are often structured on a country model that makes these contacts difficult to implement. A global communication deal spanning Europe and America with small sites in Asia and Australia took over 15 months to close which leads to a considerable opportunity costs of striking a local deal in a highly competitive near commodity based market.
Companies like CSC, Dimesion Data and Axon are facing an unparalleled demand for their services, this trend is likely to be present in the next 2-3 years.

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