More Australian Firms Seen Outsourcing IT Works

“Outsourcing has officially arrived,” declares Forbes Magazine’s Eric Wagner.

To believe or not his declaration, Wagner just couldn’t be more authoritative when it is Peter Drucker, the legendary management guru, he is referencing here. Drucker once envisioned a future (“Next Society”) where everything will be outsourced.

The Next Society could already be happening now or in the coming years ahead. But still what’s certain, we’ll get there when we get there. To the uninitiated, Wagner introduces Drucker as “a man with a seriously keen eye for business” whose insights apply to all entrepreneurs everywhere.

These Next Society’s corporations may have already arrived, particularly among Australia’s business sector. An ITNewcom survey of 60 executives at top IT spenders in Australia revealed some glowing insights about outsourcing.  There are now 75 per cent of organizations that are already outsourcing some of their software applications, while 85 per cent outsource some of their infrastructure.

The outsourcing trend shows no sign of abating and will continue to increase in the forthcoming future. A benchmarking and sourcing consultant, ITNewcom further notes that 43 per cent of those interviewed express plans to outsource their software development services and 40 per cent intend to send to offshore vendors more of their infrastructure.

Arrangements with their existing outsourcing provider are also likely to see massive changes within the next two years. Out of the total, there will only be 22 percent of the public sector organizations and 29 per cent of private organizations who will retain their current outsourcing mix, according to ITNewcom.

There are 39 per cent of public sector agencies who are reportedly looking at outsourcing some of their application needs, according to ITNewcom.

At the back of the growing popularity of outsourcing as a viable and logical part of IT operations by many in the industry, it also has received some bad raps and fierce public outcry that jobs are being migrated abroad. The source of much of the public reaction stemmed from the misconceptions and myth-making campaigns by some sectors who are opposed to outsourcing.

Outsourcing is viewed by Australian business leaders as a path that could provide them many benefits. Among the three cited reasons why outsourcing is an attractive business proposition include the following: 1) access to resources not otherwise locally available, 2) cost reduction, and 3) ability to increase output on demand.

Observers consider Australia with a mature information and communications technology market, where outsourcing comes as a smart business strategy to take. An analyst at Gartner finds outsourcing a growing trend than insourcing or bringing IT jobs back into the company. Given the general business climate of Australia, there are only very few large-scale moves to bring their IT responsibilities back in-house.

Going back to insourcing is typically costly and a disruptive step. These alone prompts organizations not to hasten decisions to return back to inshoring as such move is not to be taken lightly. Not certainly an overwhelming strategy, insourcing does not work for some organizations.

The move to return to insourcing are often the result an overhauling of organizational philosophy away from outsourcing. Some cited leadership change or the bad experience that some organizations have had with their outsourcing contract.