According to a report from PricewaterhouseCoopers LLP (PwC) majority of senior executives -- 87% -- think IT outsourcing delivers on the business benefits projected in their original plan. Even more, 91%, say they will outsource again, whether totally happy with the results or not, because outsourcing has become "such an essential business practice." The endorsement comes despite a "frequent disconnect" between the expectations of the executives and those of their service providers, according to the findings.

"In the time I have been with Gartner, which is seven years, there hasn't been a retraction in the amount of outsourcing," Gartner analyst Lorrie Scardino said, adding that warnings about the death of outsourcing tend to come in waves. In 2004, for example, after several high-profile incidents of outsourcing contracts getting cancelled, and the work brought in-house, there was a surge of publicity to that effect.

The PwC study is based on responses from 226 senior executives in private-sector corporations worldwide and 66 outsourcing providers. Fifty-one percent of the executives worked in firms with revenue greater than $1 billion, including 16% with revenue exceeding $10 billion. The 66 service providers were mainly from the United States, China, India and the U.K.

IT services remain the most widely outsourced activity, reported by 57% of those surveyed. But, overall, 70% of respondents said they outsource one or more "strategic activities," including the production or delivery of core products (53%), sales and marketing (33%) and research and development (32%).

As outsourcing expands to other areas, CIOs may be tapped for their expertise by companies, PwC's Scott said."We see that in the work that we do in the field, where CIOs maybe have now five or 10 years of outsourcing experience. As the organization looks to outsource other functions, the CIO is playing an active role in the outsourcing strategy of the firm," Scott said. "They are being solicited for their lessons learned."

Two trends CIOs need to be aware of are the move from single-contract/single-vendor outsourcing to multivendor outsourcing, and the wariness with which CEOs continue to view global offshoring, Scott said.Using a single service provider is not about to disappear: 39% plan to increase their use of this approach. But other models have the momentum: 50% of the firms surveyed expect to increase multisourcing and 45% to increase their use of joint ventures. The findings are compatible with findings from Gartner on the recent trend of using multiple, specialized providers."I don't think that the growth in outsourcing diminishes the role of the CIO. It can free up the CIO to be more strategic, to have more time available to work with the business, and to gain access to a much broader range of skills and resources," Scott said.

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Tags: outsourcing - cio - pwc - gartner

Prashanth Rai