November 29, 2006
Rebuilding In-House Capacity Is Not Feasible, Say Australian Majors
This one’s for those who thought that this outsourcing problem was a passing phase: It is NOT. The problem does not lie with the great capabilities of the people in the country to which work is outsourced. The problem lies with the company that outsources its capability. Once a company outsources, it is next to impossible to rebuild in-house capability.
According to a Gartner study that was conducted last year, only 23 per cent of the Australian companies that outsourced managed to bring services back in-house. And the outsourcing deals today are nothing like they were in the past. This is the age of selective sourcing which focuses on getting assistance in areas where the company either faces an IT skills shortage or wants to free up staff and resources. Computerworld.com reports:
One high profile recent example is Qantas, which has outsourced internal IT applications support and maintenance. The transition will take over 15 months and Qantas will shed some 340 Australian IT staff. Qantas chief executive officer Geoff Dixon said it would require an investment of up to $100 million to develop an in-house capability, an investment it could not support.
Read more: Outsourcing a done deal with very few able to rebuild in-house capability
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