The Rise of Elastic ITO

Despite ITO’s reputation as a means of reducing cost, lowering the expense of maintaining in-house IT operations is not always the top priority for an organization purchasing ITO services. As a recent survey of CIOs and other top-level IT decision-makers from global consulting firm Bluewolf indicates, needs to increase IT agility and have access to specialized IT talent are becoming as or more important than cost reduction.

The Elastic Approach to IT Staffing
Bluewolf found that CIOs, directors, and managers are shifting away from traditional IT staffing methodologies and instead turning to what the consulting group terms an “elastic workforce.” This means embracing a multi-sourcing model where IT employees, services, applications and infrastructure are sourced from several different locations, which can include both in- and out-of-house options.

In addition to increasing the agility and fault tolerance of the IT department, multi-sourcing also allows IT decision-makers to have access to top-level experts on as “as needed” basis, gaining both expertise and outside perspective. Previously associated with cost-cutting, IT outsourcing is thus evolving into a strategic tool whose use Bluewolf predicts continue to grow as CIOs increase emphasis on customer service, employee engagement and the overall role human beings play, alongside technology, in driving innovation.

ITO Market Shows Real Growth
In addition to its own judgment, Bluewolf also has some real numbers to back up its assertion that the IT outsourcing market is growing. For example, 32% of survey respondents say they will increase IT outsourcing investments and 48% say they will hire more contractors rather than full-time staff, in the next 12-18 months.

Survey results also show some tilt toward application services and cloud computing in the current ITO arena. Bluewolf research shows that on average, 48% of outsourcing budgets are allocated towards application service and 17% of all outsourced data center operations are managed in the cloud. Bluewolf says cloud computing is partially driving outsourcing growth, as more companies use applications from the likes of Salesforce, Google and Workday.

The Elastic Revolution: Join or Suffer the Consequences
All CIOs, whether they currently engage or are considering engaging in ITO, need to seriously consider joining the “elastic revolution.” Bluewolf is frank in its warning to companies that do not take this approach to ITO, stating that “companies who don’t modernize both their technology and how they access talent face the possibility of extinction” as a result of not being able to find talent fast enough in response to modern technology challenges such as cloud, Big Data, social enterprise and mobile.

Extinction may be too strong a warning, especially in the year 2012 when there are already so many doomsday scenarios flying around, but Bluewolf is correct in stating that the elastic workforce represents the future of IT staffing. The increased pace of technology development and global business competition means companies have to stay constantly at the leading edge of IT just to avoid falling behind.

And unless you have the in-house human, technical and monetary resources of an IT giant like Facebook, Google or Microsoft, this will require creative outsourcing that allows access to different specialized sources of talent and technology, when needed. Cost is always a prime factor in any business decision, but smart CIOs will start to think more “elastically” when evaluating ITO service providers.