Yin & Yang strategic outsourcing

12.09.2006

She noted it is common among local organizations that 60-70 percent of their IT teams are engaging in the daily routine. But the resources that keep the system running only contribute 30 percent value to business growth.

"Such mismatch between IT and business is forcing CIOs to re-evaluate their IT structure and outsourcing strategy," said Chan. "Even when CIOs like to restructure their IT teams, it's not easy to bring such a revolutionary shift in human resources."

Beyond monetary cost and benefit

In this case, the relative cost, meaning the cost to run the operation internally, is high. When making strategic outsourcing decisions, enterprises should look beyond the monetary cost they are paying the service provider, but instead, the relative cost of running the operation in-house, stated Chan.

Siu agreed. If enterprises seek monetary costs in outsourcing, the percentage of business administrative costs will determine the CIO's decision. He added enterprises with business administration costs of 60-70 percent of overall expenditure tend to have higher motivation for tactical outsourcing.