Gone are the days of government and corporate edict that assumed anything outsourced was better than doing it yourself. But also gone, mercifully, is the not-invented-here mantra that assumed nobody could properly provide your corporate IT needs unless they were on the payroll. Now the apparently more sensible middle ground is being sought -- selective sourcing, or right sourcing.
Seemingly obvious because it's what is being done now, the process involves constant review and analysis of IT functions to see whether they are best performed in-house or sent out to the experts. Andrew Richardson, managing director of KAZ Technology Services, provides outsourced services to many enterprise customers. He has witnessed the trend towards selective sourcing, away from wholesale outsourcing.
-The outsourcing industry is maturing and going through different growth stages and the era of the throw it over the fence comprehensive outsource is on the decline," says Richardson. -In fact it's largely dead. It's much more the norm now for companies to look at a selective sourcing strategy rather than either a total in-source or total out-source strategy."
The business process targets for outsourcing are many and varied, but the HR function is popular, particularly with SMEs that can't justify, or afford the kind of necessary expertise to run their own HR department. -If you're a very large organisation with the funding and need to support a sizeable internal HR community, the economy of scale and access to expertise argument is more compelling, than if you're a medium sized organisation," says Richardson. -We see HR outsourcing particularly in the middle-sized corporates down, rather than the top end of the market. But it's really very much a question of an individual company's business strategy."
A business needs to work out what's important, where they're going to get their growth, where they're going to get their efficiency improvements. What's core, what's not core. -Typically when they go through that type of analysis, they end up with some things that they just need to do at least as well as everybody else," says Richardson. -It doesn't matter if they don't do it better because it's not a key source of competitive advantage."
The types of business processes that lend themselves to custom outsourcing are often counter-intuitive. For example, in the superannuation industry and the industry funds sector, KAZ provides end-to-end client administration services for a large section of that market. -About four million Australians have their superannuation administered end-to-end by KAZ so when they ring up to talk to the fund, they're actually talking to us," says Richardson. -Outsourcing customers have matured. It's obvious in retrospect, that if you throw something big and ugly over the fence, and stand on tip toe and look over the fence, it's still big and ugly from the other side."
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