Skills for sale

In the late 1990s, at the height of the dot-com boom, organisations had one major gripe – lack of access to up-to-the-minute, affordable technology skills. Now, mid-recession, they face the same problem. Although there are thousands of IT workers without jobs, the skills they possess are frequently out of date and tagged to legacy systems.

This has led to a major change in the way organisations outsource their IT operations. Whereas traditionally, outsourcing more mundane IT work such as data centre management,


What to outsource – and what not

Some areas of technology development and management are better suited to being handled by a third party than others. Yogi Schulz, president of Canada-based Corvelle Management Consultants, offers some advice.


Why outsource?

  • Adjusting system configuration could prevent 99% of all attacks.
  • Most networks are inspected more frequently by hackers than administrators.
  • Due to time constraints, many administrators treat security management as a secondary task.

    Why not?

  • 56% of IT managers believe outsourcing security would not improve their security.
  • 90% believe they already have the resources to manage security.

    Desktop support


  • Desktop support is time-consuming and frequently repetitive so it is difficult to retain skills.
  • Desktop environments are becoming more complex and outsourcers can afford the training required to build skills.
  • Easy to measure effectiveness of deal, for example by amount of time spent on other tasks that would have been spent on desktop maintenance.

    Why not?

  • Security: it allows another company access to the corporate network
  • May not have on-site support capabilities
  • Will not necessarily solve all support issues without new in-house processes

    Network operations


  • Requires people with niche skills who are difficult for non-technology companies to attract, motivate and retain
  • Provides a highly available network at a contained cost
  • Easy to assess the effectiveness of the deal

    Why not?

  • Security: it allows another company access to the corporate network

    Application development


  • Pushes the risks and complexity of application development to a supplier. Successful application development requires the smooth interaction of many individuals with particular skills – an environment difficult to create and sustain in many organisations.

    Why not?

  • It’s extremely difficult to measure the effectiveness of application development Replacing the supplier can be disruptive and difficult

    IT strategy

    Why not?

  • Almost never successful
  • One of the key functions of the IT department
  • Outsourcers lack the required depth of knowledge of their customers’ business, relationships and customers.



    call centres or desktop support has accounted for the bulk of deals, an increasing number of IT managers see the benefit of outsourcing more cutting-edge projects – such as web services development or mobile applications – that are difficult to manage in times of reduced headcount and tight budgets.

    “The infrastructure side of outsourcing is very mature,” explains Ian Marriott, an analyst at research group Gartner. “We’re now seeing a move towards more applications areas being externalised, for example by outsourcing development offshore.” By doing this, he says, businesses can make project costs more predictable, eliminate the element of risk that is frequently associated with new technology projects, and also gain affordable access to skills.

    Outsourcing these newer skills can also improve time to market and enable organisations to use more leading edge technology. The fact that outsourcers work on multiple projects across a wide span of companies mean they can normally get up to speed with new technologies while they are still in the early adopter phase.

    In the case of web services projects, for example, Forrester analyst David Metcalfe believes that organisations are safer approaching external experts than tackling development in-house.

    “European companies will need expert help to deploy web services in large-scale projects,” he says. “2002 was the year of the web services trial project – in 2003, web services will impact the business. But building the right business interfaces requires outside expertise.”

    Similarly, as more and more employees work from home or remotely, an increasing number of organisations are deciding that the management of complex wireless technologies across potentially hundreds of employees is a task that they would rather hand over to a service provider.

    UK financial services company Friends Provident, for example, has outsourced the management of its remote sales force’s laptops – from back-up to back-office integration. It estimates that the move has reduced IT costs by around one-third.

    People finders

    Although such cost savings are very welcome, many organisations say that a more important consideration is their inability to source people with the right skills to carry out projects, or a desire to have the ability to scale IT resources up and down as required.

    That is particularly true for smaller companies, which not only find it difficult to justify full-time, specialist IT staff, such as DBAs, but also find it difficult to hold on to them. The best IT people generally want to be in an environment where they are constantly learning, working on new projects and developing their skills. It is very difficult for smaller organisations to provide that kind of opportunity.

    “Generally, outsourcers have a pretty good depth of skills,” says John Whitworth, a former CIO and consultant who is now marketing manager at BT Ignite. The larger outsourcers have capacity and expertise in a wide range of areas and can bring in partners for the more specialised skill sets that they don’t cover. Because of their size, he says, they can frequently aggregate services from a portfolio of suppliers and shield the cost of managing these contracts – typically between 3% and 7% of the overall deal size – from their customers.

    That is not to say that organisations should steer clear of smaller, specialist providers. However, outsourcing consultants such as Morgan Chambers and TPI warn that niche companies should be used on a project-by-project basis. For example, security specialist Aventail produces its own virtual private network system that runs on SSL – a potentially high-risk project that requires highly specific security development and management skills that a larger outsourcer may not be able to provide. Customers can approach Aventail directly, or go through its far larger partner IBM Global Services.

    Equally, some specialist outsourcers exist purely to provide and even showcase cutting edge technologies and skills. Microsoft and Accenture together founded Avanade to develop applications based on Microsoft’s .Net application development platform. “We often take part in Accenture’s outsourcing deals,” says Avanade’s VP of strategy, Mick Slattery. “Some companies do have fantastic people, but we have a broad experience of business across the globe and a range of ‘premium skills’.”

    Finally, one of the greatest challenges of running new technology projects is ensuring they come in on time and within budget. Since outsourcers have to run any number of technology projects concurrently, these are skills they have in abundance.


    Choosing what to outsource

    According to John Whitworth, marketing manager for BT Ignite, picking which areas are ripe for outsourcing is very company-specific. “The old adage was ‘keep what’s core and outsource what’s not’. But I think we’re very much past that now,” says Whitworth, a former CIO and consultant. “Instead, you should outsource the areas where you can add value by doing so and gain a competitive edge.”

    Mike Schraer, who manages outsourced contracts for telecommunications and IT services company BT covering property, human resources and accounting, found that the services that were best suited to being outsourced were those that were not central to its day-to-day business and deviated from BT’s internal management structures. “The fundamental point is that [the services we outsourced] were non-core activities to BT. Our partners could do these things better than we could.”

    Keith Suxton, director of financial markets at IBM Global Services, believes that the choice of what to outsource can be determined significantly by the market in which an organisation operates. “With telcos, a call centre is an obvious target for outsourcing; with financial services, the front office may be more appropriate.”

    So with most outsourcing deals, it is usually best to start with a discussion of what the organisation hopes to achieve through the outsourcing. Most of these discussions start out with a comparison of the current state of the business with the intended state, says Brian Walsh, founder of US-based technology consultancy From here, an organisation can assess its existing skills, compare them with the skills it will need in future, and decide whether it will be easier and cheaper to do that work in-house or outsource it.

    Typically, says Walsh, the selection of what to outsource boils down to two things: legacy systems, that while necessary, have outlived the skills necessary to support them; or applications that the organisation would like to have but cannot create in-house.

    Fundamentally, the business needs to be in good shape before even considering outsourcing. “The worst possible strategy you can have is outsourcing an inefficient business,” says Alan Paris, a partner at financial services consultancy Capco.



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    Ben Rossi

    Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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