Do what you do best, outsource the rest. That mantra was repeated throughout the 1990s by executives who had got outsourcing religion. It spoke to the deepest impulses of non-technical boardrooms. To the slower learners it said: most of this technology stuff is necessary but dull, let's treat it the way we do the cleaning services or the catering.
As recession bites, and staff remain hard to find and harder to keep, expect a lot more of this. Often, those noises will come from the IT industry itself. Compaq's announcement last week that it was to cut 700 jobs at its PC assembly facility in Erskine, Scotland, was a flare. Compaq will outsource that manufacturing to a Taiwan-based company with a plant in the Czech Republic.
Erskine was no fly-by-night project. Built in 1987, it is one of the jewels of Scotland's Silicon Glen. Not just a 'screwdriver' manual assembly line, Erskine is a sophisticated plant with facilities for manufacturing circuitboards. It was celebrated by the Tories in a 1989 Commons debate, and always by Scottish Enterprise.
A decade ago, Compaq marketed itself on its design and manufacturing capability. PCs are not commodities, it argued: excellence differentiates. In the UK at least, Erskine was part of Compaq's brand, its culture, its differentiation.
Compaq will continue to employ 2,400 people at its Ayr plant, but it is difficult to see the Erskine closure as anything but a further diminution of the quality-at-any-cost unique selling point that Compaq once held dear. Clearly, it is now Compaq's policy to view the PC as an item to be made at lowest cost. Look at this official statement from Compaq's supply-chain chief: "The PC is a commodity and price sensitivity is a major factor." What would company founder Rod Canion or, more importantly, the many IT heads who were 'true-Q' supporters, think?
All this is not necessarily to criticise Compaq. Companies change their strategies and are duty-bound to chase profitability. Many other firms will be thinking along similar lines to Compaq's management. Is there fat in the model? Can we swap out these people, this business process or this IT function to a specialist?
Outsourcing is attractive in many ways. It sends out a booming capital-letters message to the markets: WE ARE ACTING RESPONSIBLY AND IN THE INTERESTS OF OUR SHAREHOLDERS. According to studies, most companies that announce an outsourcing deal get an immediate share-price lift.
Also, if managed correctly and the outsourcing is selective, the vast majority of respondents report cost savings and equal or superior service levels and application performance.
Third, outsourcing famously allows customers to focus on their core competencies. The organisation is liberated to create revenue-earning opportunities, forge transitions and develop its business, while the outsourcer maintains processes or specialist tasks.
There are plenty of examples to show that outsourcing isn't just smoke. Many of them can be consulted in an excellent new book called Global Information Technology Outsourcing by Lacity and Willocks (John Wiley & Sons). But there is also a temptation for companies in a tight corner to get carried away and outsource the very value of the company itself.
Outsourcing is a model with extraordinary transformational power and concomitant risk of damage to brand, organisational culture and customer relationships. Too many firms get drunk on outsourcing and make a short-term gain for long-term pain by not thinking through which elements are ripe for sourcing, and which have a unique value and should be kept internal. The change-management is sensitive, and processes and assets must often be cherished rather than ejected.
