A new book from Gartner has heavily criticised what it terms the "compulsive outsourcing" culture that now dominates many companies.
Organisations are embarking on outsourcing without thinking through the complex train of consequences, the authors of Multi-sourcing: Moving Beyond Outsourcing to Achieve Growth and Agility, claim.
The book takes a sharp-edged cutlass to a number of outsourcing myths that afflict it, and IT outsourcing in particular. These include: over-estimation of the economies of scale on offer; naivety about the extent to which outsourcers can manage the services independently; and a tendency to buy on the cheap without appraising hidden business costs.
The damning picture painted is of a business world that would rather rid itself of important but troublesome business problems in the mistaken belief that they can be shunted on to a specialist company for a fixed, low price.
"Chaotic and compulsive outsourcing creates as many challenges as it solves. Furthermore, in many cases, the problems are caused by the immaturity of the organisation's sourcing practices rather than being the fault of the service provider," says co-author, Linda Cohen. "Companies need new approaches to sourcing strategy, sourcing governance, sourcing management, service provider selection and service measurement."
Being analysts, of course, Gartner doesnt quite close the door on the out-of-house concept entirely. Forget outsourcing, here comes "multi-sourcing" to solve the problems.
It is really no more than a sophisticated version of outsourcing, but embarked on with a different mentality. The book suggests that companies going down the outsourcing route should restructure themselves to manage the contracts in a hands-on way, and consider how to do this across different suppliers in an integrated way. Simply trying to cut costs will not deliver the expected benefits.
Critics of business outsourcing can point to the sandwich horror story of British Airways. Earlier this year, dire industrial relations afflicted its outsourcing catering supplier, Gate Gourmet. The resulting strike ended up costing the airline tens of millions of pounds - about what it had hoped to save with the contract - leaving it without in-flight catering and curried egg on its face.
Would multi-sourcing have saved the company from this debacle? Possibly. But a multi-sourcing approach would probably have told it not to put such a critical service in the hands of a third-party in the first place.
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