IT Outsourcing System Is Broken, How Can Service Providers Fix It?

Andrew Wasser, a veteran CIO and the associate dean of the Heinz College's School of Information Systems and Management at Carnegie Mellon University, tells CIO.com how outsourcing providers can develop cultures of innovation and other challenges and trends and in the industry.

By Stephanie Overby
Thu, March 29, 2012

CIO — Andrew Wasser's perch affords him a broad view of the IT outsourcing industry. Wasser serves as associate dean of the Heinz College's School of Information Systems and Management at Carnegie Mellon University (CMU), where a third of the graduate students studying applied business and information technology are refugees from the IT services industry. He has oversight over many of CMU's business projects that are commissioned by a virtual who's who of the outsourcing industry -- providers, clients and consultancies. And, as a veteran financial services CIO and director of CMU's CIO Institute, he has an intimate understanding of the outsourcing practitioner's point of view.

From his multidimensional perspective, one thing is clear: The outsourcing system is broken. Heck, if you go by the old saw that defines insanity as doing the same thing over and over again and expecting different results, it's downright crazy. The vendors say they are strategic partners, but they are in fact neither strategic nor partners. Both providers and customers say they want to create more business value and innovation, but neither is making the changes necessary to do that.

CIO.com talked to Wasser about what ails the outsourcing industry -- from talent gaps and process devotion to closed-off clients and poor communication -- and what, if anything, could turn things around.

CIO.com: You have a particular interest in the growing talent gap in the global sourcing industry. What is the state of offshore outsourcing recruiting?

Wasser: As important as what we are seeing is why we are seeing it.

My bias is in looking at the big Indian firms -- Infosys, Wipro, Cognizant, TCS -- and to some extent the Accentures, IBMs and captive centers. In the beginning when you talked to a tier-one sourcing [firm], they would tell you, "We get the best of the best." They made offers only to the top 0.5 percent at the universities. And they may still tell you that today, but the reality is quite different.

Because of increased competition and a shortage of talent, they have had to go much deeper into the pool of students and go to second and third-level schools. They are no longer getting the best and the brightest. It's no longer a coup to get an offer from Tata because everyone is getting an offer from Tata.

CIO.com: Is that just a result of needing more people? Are they still recruiting the best and brightest as well -- or is that top talent going elsewhere?

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