Aussies grow accustomed to IT outsourcing

By Rodney Appleyard

May 30, 2005: IT outsourcing is becoming common practice in Australia for small, medium and large organisations in a wide number of industries that are heavily reliant on ICT, according to a recent study.

This research, carried out by two senior lecturers from the University of Southern Queensland, added that the success of this outsourcing method is also dependent on the partnership, which has to be based on trust and business understanding.

Michael Lane and Glen Van der Vyver reported that organisations are more likely to outsource IT that has an operational role while retaining IT that has strategic value in-house.

"The findings show that the majority of organisations are involved in partnership type relationships with their outsourcing vendors and that many of the relationships are well established. The findings suggest that a partnership type relationship is a strong indicator of the overall success of an IT outsourcing relationship.

"Trust, business understanding, dysfunctional conflict and functional conflict are the key drivers of partnership quality which impact on the success of an IT outsourcing relationship between the client organisation and its main outsourcing vendor. Strategic and economic benefits are dominant dimensions of IT outsourcing success."

The main findings reveal that the industries which are the most reliant on ICT, where the main IT outsourcing activity is concentrated, are manufacturing; Government, administration and defence; banking, finance and insurance; retail trade; and transport and storage.

But many organisations are still cautious and selective to what extent to which they outsource IT. Network management, application development, disaster recovery, configuration management, software development and helpdesk-end user support are the most popular IT functions for outsourcing.

Overall, trust was found to be a very important factor buttociated with IT outsourcing success, because it is correlated in a positive way with the level of business understanding that exists between the client organisation and its main outsourcing vendor.