The benefits of IT insourcing

By Rachel Lebeaux, SearchCIO.com | Jun 26, 2009

The economic slowdown, the numerous IT outsourcing scandals and the potential cost savings of reducing the number of outsourced contracts have caused companies to give insourcing another look.

"The pros of insourcing are the speed and control of business change," said Ben Trowbridge, CEO of Alsbridge Inc., a Dallas-based IT outsourcing and business process optimization consulting firm. Trowbridge said his company's IT insourcing evaluations have increased about 15% this year.

Dave Rice, previously global CIO at Insight Enterprises Inc., said he once pulled IT help desk and customer service functions back in-house when outsourcing companies were not properly meeting his organization's needs.

"We had some unpleasant experiences -- our customers were unhappy," said Rice, currently CEO at True Cloud LLC, a cloud computing services firm. "I wasn't satisfied that we were getting the same proximate IT services. You have to be very, very careful with anything that affects the broader perception of IT, and make sure you don't diminish that service -- people will immediately notice."

Only 9% of CIOs said they planned to increase IT outsourcing this year, according to the latest update to Gartner Inc.'s 2009 CIO Agenda survey, and many are considering insourcing previously outsourced functions.

In most cases, the newly insourced work previously involved contract programmers and consultants, according to Mark McDonald, group vice president and head of research at the Stamford, Conn.-based consultancy and author of the CIO Agenda study. "For the average company, the cutback is temporary as investments are delayed or postponed," McDonald said.

Rice said a slowdown in outsourcing activities this year could stem from companies reaching a "saturation point." He also posited that it is very difficult to get sustainable cost savings out of outsourcing.