He sees offshoring providers becoming offshoring "partners": "adding value, providing thought leadership, and exchanging best practices".
It's necessary, Elfrink said, to leverage the resources of global players in order to develop new products at the breakneck speed the market demands.
"I think at the moment, being a CIO is one of the most complex jobs," he said. "You have to dare to make bets. You have to dare to make a choice."
"You need to make investments in trusted relationships," agrees Peter Bendor-Samuel, founder and CEO of outsourcing consultancy Everest. "Naturally that means you have to cut down on the number of suppliers. Fundamentally, it requires a change in your trust barriers."
How close is too close?
Cisco is not shy about letting down its trust barriers, especially in the area of offshoring application development. After kicking off a basic offshoring relationship with HCL around "time and materials" to develop a new product line a few years ago, Cisco recently took its marriage to new extremes. HCL now shares a revenue stream with the networking vendor from the sale of the Cisco-branded product.
"We wanted everyone, from the CEO down to the developers, be it at Cisco or HCL, to feel ownership of the project," said Clive Foreman, vice president of the network management product group at Cisco.
"We bring HCL into customer engagements and share customer satisfaction data and even our results around that product line. We actively encourage the HCL team to bring new ideas to the product line. There's already been a lot of patentable IP created."
In light of the close relationship, Cisco has removed any SLAs (service level agreements) out of the deal.
"Generally an SLA is a penalty applied when the performance of an outsourcing partner continually falls below an agreed threshold," Foreman said. "There are zero SLAs between Cisco and HCL. While we have a sufficient array of metrics around quality, around productivity and hitting dates, the reality is that if any of these go south, we're both in trouble."
Foreman said that such a strategy involves a greater amount of risk. "It comes down to choosing the right partner," he said. "You don't do a deep partnership with somebody that doesn't share a strong sense of mutual commitment and trust."
Other CIOs are a little more conservative, even if they are engaging in deeper relationships with their outsourcing partners.
A recurring theme among CIOs attending a conference on outsourcing in India earlier this month was that while closer relationships are desired, one needs to remember who the client and who the customer is.
Outsourcing partners need to understand, said Deutsche Bank's McCarthy, that even if they move to a more equitable "partner model" they won't just be getting the high quality, visible work -- but will have to continue to perform tasks that aren't so glamorous.
McCarthy said that DB offshores to "take off our plates some of the huge burden we face managing literally thousands of applications on a day in day out basis".
"We often see with third party strategic partners, they want to go into the deep change space, the development space. They would always come to me telling me what they wanted to do for me rather than listening to what my problems were. And my problem is a big application environment that needs to be supported."
McCarthy said he had to sit down and explain to the outsourcer that while new application development represents 10 percent of the bank's application spend, ongoing application management is 90 percent. "I had to ask, why were you pursuing the 10 percent rather than the 90 percent?"
