Industry Analysis

Outsourcing is a decades-old business, but lately it has spread like an airborne virus in corporate IT departments. And few IT executives are willing to risk their jobs to fight it, according to a survey conducted by PC Week Executive and the Society for Information Management. Nearly three in four corporations surveyed outsource one or more IT functions-and the often controversial practice still hasn't peaked. Only 8 percent of senior IT managers interviewed say they are neither outsourcing nor studying it. A desire to augment IT staff with highly skilled developers is the most common reason that organizations turn to outsourcing, the survey shows. In a sign of the times, PC and network maintenance is more often outsourced than mainframe or legacy systems.

The PC Week Executive/SIM survey, conducted by telephone in late June 98, asked 100 senior IT executives to evaluate the pros and cons of outsourcing. The responses indicate IT managers are learning to accept outsourcing despite sobering concerns about the" anxiety and stress" it can cause them and their staff.

The senior IT executives, who engage in outsourcing, and the outsourcers, are scrambling to invent new kinds of partnerships aimed at improving bottom-line results. "The interest in outsourcing has shifted from cost containment and cost reduction to business growth and increasing market share," said Mike Bauer, director of technology planning services at Electronic Data Systems, in Piano, Texas. "To say you're avoiding outsourcing is to avoid a tool," said Chuck French, manager of consulting in Meta Group Inc.'s sourcing strategies practice, in Reston, Va. "It's similar to avoiding using a PC or some other form of automation."