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Outsourcing: The Socitm view

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This year’s annual Socitm President’s Conference in Glasgow hosted a breakout discussion on the findings of a forthcoming Socitm Policy Briefing research report on the future of IT outsourcing.

It was attended by a number of invited Socitm members, to review the draft findings of the research and to test these with the wider views of leading practitioners in council ICT departments.

Socitm has been advising its members to be cautious of naive outsourcing of ICT since the days of ‘compulsory competitive tendering’ (CCT) in the 1980s and early 1990s. At that time, such advice often flew in the face of central government policy that seemed to favour wholesale outsourcing of ICT in the public sector, as was the case across Whitehall.

Today, the picture is very different. Socitm policy advocates ‘smart sourcing’ as critical for successful ICT delivery – more aligned with common sense than past Whitehall policies. This is particularly important today, with cloud models offering more flexibility in scale and cost than traditional ICT outsourcing.

Not only are Whitehall departments pulling back from outsourcing: the trend is extending across the private sector as well. Whilst vindicated in its views, Socitm is also clear that ICT insourcing is not the answer (though some careful and selected ICT insourcing can be valuable).

These were views endorsed at the conference breakout session led by Socitm associate Jos Creese. Five key learning points emerged:

  1. Political dogma can get in the way of good ICT business choices, especially when these emanate from central government to local government. ICT choices should be decided based on risk, value, technology opportunity and other factors at a local level.
  2. It’s not a question of outsourcing or insourcing, but careful choice of delivery partners for ICT, as has always been needed. Some of the ICT skills that may best be retained in-house are: business analysis, project management, cyber security, digital architecture design, ICT strategy, and ICT operational delivery oversight, including contract management
  3. Bringing ICT services back in house is typically a complex change programme in its own right. Building ICT capacity from scratch takes time. Where ICT services have been outsourced for any duration, internal ICT skills may have been eroded significantly.
  4. Traditional ICT outsourcing models, including the contracts and the way services are designed and delivered, are based on a pre-cloud world, which is often no longer fit for purpose. The main suppliers know this and are gradually trying to change their service model, but this will take time. Councils that are locked into inflexible ICT outsourcing contracts need to consider their exit strategy and seek help if necessary.
  5. The balance of choices between ICT ‘insource’ and ‘outsource’ is not clear cut. Factors to consider include: the scale of the organisation, appetite for risk, culture, skills and the ICT starting point.
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