11 outsourcing myths debunked

Outsourcing has evolved — and so too have the misconceptions around what makes a successful sourcing partnership in the digital era.

11 outsourcing myths debunked

Entering its third era, IT outsourcing is at a significant inflection point. Its first 20-year era was marked largely by the quest for operational excellence. Much of the next 20 years was dominated by the rapid, widespread adoption of offshoring and labor arbitrage. Now, the as-a-service era sees consumption-based outsourcing becoming the norm.

Meanwhile, the COVID-19 pandemic has rattled the IT outsourcing environment as well. IT leaders are rethinking their sourcing approaches. “In effect, everything is on the table,” says Jimit Arora, partner at Everest Group. “Every aspect of the solution portfolio is being re-validated and the existing cost pressures are causing companies to take a fresh look at the different strategies in the outsourcing portfolios.”

Moreover, as enterprises accelerate their shift to a fully digital operating model, they are becoming much more reliant on their IT service providers, says Phil Fersht, CEO of outsourcing advisory and research firm HfS Research.

At this time of tremendous market activity and decision making, it’s important to take a look at the new realities of outsourcing. Even with outsourcing a mainstay strategy in IT, misconceptions persist. Worse, new illusions have emerged as outsourcing approaches continue to evolve. Achieving desired outcomes when working with third-party providers depends on clear-eyed understanding of what’s possible and what’s not, what responsibilities remain with the buyer and what new capabilities are required, what’s changed about outsourcing models and what remains the same.

CIO.com talked to IT outsourcing experts who work with IT buyers and vendors to help bust some of the most common myths around outsourcing today — and to aid IT leaders in setting up their latest generation of outsourcing engagements for success.

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