Tom Davenport – the Harvard Business School professor who is seen by many as responsible for the term big data’s rise in popularity – has caused a stir on LinkedIn after claiming that “companies have stopped outsourcing IT” and the rest will soon follow.
While the big data expert and author acknowledges that “IT outsourcing still drives about 60% of the entire services sourcing industry”, he goes on to say that the “practice is in decline for all but the most commoditized IT services”.
His belief is that the rise of digitalisation, big data analytics and cognitive technologies has made IT simply too precious a resource to outsource, proposing that “even in the heyday of outsourcing, some companies realized this”. He adds that automation, along with the rise of as-a-service and cloud-based tech, are also contributing to the demise of IT outsourcing.
Davenport adopts a narrow perspective to say the least. Firstly, his argument neglects all but the largest companies. The benefits that IT service providers, proficient in the exact fields he mentioned – digital, big data analytics, cognitive technologies – can bring to smaller organisations that are not financially capable of expanding in these areas are massive.
Furthermore, it seems a tad naïve to argue that your Accentures, IBMs and Wipros no longer have anything to offer buyers of IT outsourcing – even the largest ones. Certain ITOs will need to adapt their services in order to stay in the game in the build up to 2020, but they will always be able to primarily focus on IT-related fields, incorporating new digital services as and when they come. As always, IT vendors will be able to take over particular operations they specialise in on behalf of the buyer, allowing that client to concentrate on core tasks that are responsible for bringing in revenue.
As one high profile industry expert commented on Davenport’s post: “No sane organisation outsourcers everything in IT, and few sane organisations outsource no IT at all”. New trends and technologies are not going to change that fact.