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Destiny of outsourcing mapped out for next decade, says Gartner analyst

  • 19 July, 2004 09:55

<p>SYDNEY, JULY 19 COVERED IN controversy currently, IT outsourcing will change dramatically over the next 10 years and offer new alternatives to buyers and additional challenges for suppliers, predicts Gartner analyst Rolf Jester.</p>
<p>Gartner has designed a four-scenario framework to predict the future of IT outsourcing, taking his view beyond today’s passionate debate in Australia about offshore outsourcing and its impact on local jobs.</p>
<p>Gartner says the impact of offshore outsourcing is "minor" currently, estimating that only 7 percent of an estimated $US728 billion of global outsourcing contracts will be spent on offshore by 2007.</p>
<p>Jester, the keynote speaker at the upcoming Gartner Sourcing Summit in Sydney next week, says offshore outsourcing is only one of a myriad of changes that the sector will undergo through to 2013.</p>
<p>“We have identified more than 100 changing facets of outsourcing that will determine its direction over the next decade,” says Jester. “But two overriding factors will influence IT in an enterprise.”</p>
<p>They are:</p>
<p>Adoption of a Real-Time Enterprise strategy - a commitment by an organisation to use information to adapt quickly to the constantly changing business environment; and</p>
<p>The types of service that enterprises will outsource from now until 2013 - particularly whether they outsource whole business processes or just the underlying IT functions.</p>
<p>Mr Jester says these two factors will determine one of four future scenarios for an IT department. The scenarios are:</p>
<p>IT Inertia - a scenario in which the existing IT investments serve to slow down the ability of the business to change quickly enough;
Process Islands - a sub-optimal state in which departments inside an enterprise look after their own business process needs, diminishing the relevance of the CIO and IT staff;
IT-Centric Real-Time Enterprises - in which businesses have become agile through a strong focus on IT; and
Virtual Enterprise - organisations are “real-time” by nature, stick to core business and buy external services for all non-core activities.</p>
<p>“While nothing can be certain looking a decade ahead, one of these scenarios is likely to be dominant for all organisations in 2013,” Mr Jester continues.</p>
<p>“Outsourcing is undergoing significant change right now. Offshoring and near-shore sourcing is just one of many changes that private enterprise and government agencies must come to terms with. It would be smart for IT executives to begin thinking about which scenario they would like to create for their organisation, and compare it to the one that is evolving right now.”</p>
<p>Mr Jester stresses one scenario is not necessarily more desirable than another for an organisation. “The concept of ‘Process Islands’ might be perfectly acceptable in some enterprises,” he says. “However, the world will move towards either a ‘Virtual Enterprise’ or an ‘IT-Centric Real-time Enterprise’.</p>
<p>Ultimately, buyers will influence the shape of the outsourcing sector over the next 10 years, says Mr Jester, but he concedes “they can only accept or reject what the suppliers are prepared to offer”.</p>
<p>He predicts a substantial push towards Business Process Outsourcing (BPO) but cautions that while every enterprise “should consider it, that does not mean they should do it”.</p>
<p>The many different outsourcing alternatives on offer will be explored by Mr Jester, together with Gartner analysts from around the world, at the Sourcing Summit to be held at the Sydney Convention &amp; Exhibition Centre, Darling Harbour, Sydney, from July 27-28. Speakers will include US-based Linda Cohen, the global head of Gartner’s sourcing practice who will give the opening keynote, “Ten Steps to Mastering Sourcing”.</p>
<p>Guest speakers include CEO of Invest Australia, Garry Draffin, who will speak about the ability of Australia to become a centre for offshore outsourcing.</p>
<p>The agenda can be viewed at</p>
<p>Interview opportunities with Mr Jester, or any of the Gartner analysts, are available in the lead-up to the Sourcing Summit. To obtain free registration, please contact Jo Lobban on 61 2 9459 4692 or email</p>

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