CIOs in outsourcing ‘value squeeze’

IT services and outsourcing firms will face inflated expectations to boost productivity and innovation from CIOs in the post-recession climate, according to a report by advisory company KPMG.

More than two-thirds of the 250 CIOs that took part in KPMG’s survey claimed that they would be paying more attention to the price/quality ratio they received in their contracts with outsourcers, while an even higher number say they will place increased pressure on their sourcing provider to deliver.

But while the report suggests that CIOs will be more conscious of the quality of service they receive from outsourcers, KPMG believes that this will not necessarily result in an overall decrease in spending on outsourced services.

"Whenever you hear of organisations wanting to focus on value, it’s tempting to immediately think of cost cutting," Bryan Cruickshank, a partner with KPMG Advisory in the UK. "Understandably, they are pursuing value by reviewing outsourcing arrangements and retaining a firm focus on cost optimisation for example. At the same time though, they are demonstrating their willingness to move the CIO role from its typically operational home into something more transformational."

The organisation’s research suggests this ‘transformation’ in the mindsets of CIOs will be away from implementing  cutbacks and cash-saving drives toward squeezing more value out of existing IT investments.

Over four-fifths (81%) of those surveyed expressed the opinion that value-driven change would be their priority in the post-recession upswing, ahead of cost optimisation (58%) and portfolio management (51%).

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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