2013 IT Outsourcing Year in Review: Grading Our Predictions

Last year, we predicted that 2013 would be the year that outsourcing governance finally grew up. We said outsourcing customers would take the reins with do-it-yourself deals. And we forecasted that local support would be a critical differentiator for service providers. Now it's time to see how those predictions panned out.

By Stephanie Overby
Fri, December 20, 2013

CIO — Around this time last year, CIO.com and its outsourcing experts made some plucky predictions for IT services in 2013 We said this would be the year that outsourcing governance finally grew up. (Hardly.) We said outsourcing customers would take matters into their own hands with more do-it-yourself deals. (They did.) And we predicted that customers would value domestic presence as a key differentiator among service providers. (It was just one of many factors.)

IT Outsourcing Year in Review

We revisited all of our prognostications from last year and found that three of them were right on target, four of them were off base and the other two were just beginning to take shape at year's end. As we pull together our 2014 forecast, here's how those 2013 predictions turned out:

Right on Target

Do-It-Yourself Outsourcing Increases

As mature outsourcing customers gained more confidence, we predicted, more IT organizations would go it alone and perform major outsourcing transactions free from the assistance of expensive external expertise. Indeed they did. While the big consultancies continued to do a steady business, a number of their previous clients inked new deals without much hand holding.

[Related: 6 IT Outsourcing Lessons Learned From Healthcare.gov's Troubled Launch]

"More buyers can do the basics of the business case, transaction, transition and governance design and operations," says Stan Lepeak, director of global research at KPMG. "They may need advice and counsel on larger complex and global deals or integration of shared services and outsourcing, but should be able to handle basics and basics-plus on their own."

The Service Integrator Model Is Tested

That new model for multi-sourcing management -- services integration -- did begin to cautiously expand. And both customers and providers began accumulating lessons learned. So we'll give ourselves a point for this one. Other than cloud computing, service integration might have been the most talked about subject in outsourcing circles in 2013," says Shawn Helms, partner in the commercial transactions and outsourcing practice of K&L Gates.

The emerging model did certainly get tested. We just don't know what the results are yet. "The service integrator model, in its various instantiations, is a good model for IT organizations going forward relative to managing a diversified service delivery channel and portfolio," says KPMG's Lepeak. "But like any model, it is evolving."

Transition Troubles Lead to Disputes

OK, this one was a bit of a gimme. Transition issues are a perpetual problem in outsourcing and they were destined to increase along with the complexity, scale, and scope of outsourcing efforts.

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