IT Outsourcing Buyers Still Don't Care About Sustainability

Environmentally friendlier outsourcing practices may generate increased profit and positive publicity for IT service providers, but they remain a non-issue for most customers. For those that do value sustainability, we offer 15 tips for discerning real improvements from window dressing.

By Stephanie Overby
Fri, March 02, 2012

CIO — There's been no shortage of announcements by global IT service providers about their sustainability projects in recent years —from run-of-the-mill energy consumption reduction goals and LEED (Leadership in Energy and Environmental Design) certified buildings to more fascinating waste conversion to manure efforts and personal carbon calculators for employees.

But for the most part, IT outsourcing buyers still don't care. "For most commercial clients, it is not top of mind," says Todd Hintze, managing partner at outsourcing consultancy Everest Group. "Clients will select the sustainable and environmentally friendly provider where it is shown to also meet the client's other—and generally higher prioritized—objectives of cost, quality, and performance. Rarely is it an explicit request."

Sustainability Scores a Zero

When outsourcing analyst firm HfS Research recently asked 50 experienced service buyers from Fortune 1000 companies to vote on sustainability as a topic for future meetings, "the topic got exactly zero votes," says Esteban Herrera, COO of outsourcing analyst firm HfS Research. "Consumers and some stakeholders—like regulatory agencies want to see corporations drive sustainability initiatives. RFPs often contain requirements to disclose sustainability initiatives. But we've never seen it count for more than a handful of percentage points [in provider selection]. At best, it is a last-string tie breaker."

There are exceptions. IT leaders working in the energy industry or for government organizations often have specific requirements for energy consumption or environmental practices. But providers who serve those verticals have had processes in place to meet those needs for some time. "Sustainability is a topic that is only brought up by the largest, most sophisticated companies that have an interest in the topic from a public relations perspective," says Shawn Helms, partner in the outsourcing practice of law firm K&L Gates. "I have only seen it raised as a criteria in the down selection of an IT or outsourcing vendor one time in the past few years.

The real driver behind the apparent greening of the big IT outsourcing providers is cost containment. "Our research indicates that IT outsourcing providers—both the major Tier Ones and the large Indian offshore providers-are seeing continual compression of their margins. As such, they are being compelled to find a way to deliver enhanced services at much lower costs," says Hintze. "Significantly reducing energy consumption for a large, leveraged data center can create much needed financial relief." If what benefits the bottom line is also good for the planet—and for corporate PR—so much the better for the providers.

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