Outsourcing has long been associated with the IT industry since Ross Perot founded it back in 1962 with the formation of EDS. Since that time, the IT Outsourcing (ITO) industry has been a mainstay of American business and has spawned a number of other outsourcing modalities such as HR, Finance and Procurement. It has had a role in globalization, helping move countries like India, China and Indonesia into greater prosperity and economic power. It has become so ubiquitous that every industrialized nation has companies that have outsourced their IT requirements to third party providers, with many of the emerging countries becoming outsourcing centers of expertise.
The rationale behind outsourcing is unremarkable and rests upon the premise that a firm who specializes in IT work and has employees that are specially trained in the IT disciplines have greater competencies with designing, implementing and running IT solutions than a firm whose business is selling, for example, soft drinks or other consumer goods. Initially, all companies who had the need for substantial quantities of data developed their own IT capabilities. As technology continued to evolve in complexity and higher costs, IT consumed more and more of a business’s budget and resources and in many cases became a drain on the company’s financial performance.
As with companies, the premise mentioned above applies not only to business processes and business functions but also to business professionals, such as those individuals who have made IT their profession. Chief Information Officers (CIOs) are senior level executives who are responsible for the entirety of an organization’s information technology requirements. They often command large salaries and generous benefit packages and are typically leaders in the IT field, sometimes globally recognized as experts.
Most, if not all, large corporations ($1 billion and higher) and many mid-level ($100 – $999 million) corporations employ CIOs as well, with some exceptions and lower compensation plans. However, since size and scope of a corporation dictate the need for IT infrastructure, most of the smaller companies have had only limited access to IT best practices and proven leadership. While smaller companies cannot compete with larger organizations for talent and IT infrastructure, current economic events, technological advances and globalization have merged to create a unique opportunity for those smaller firms.
The process of outsourcing has now been extended to individuals, specifically individuals who have served as CIOs for the larger businesses. Smaller companies with fewer budget dollars can hire a knowledgeable CIO in a sort of rental arrangemen, and benefit from that person’s experience and expertise. The outsourced CIO can come into an organization carrying no cultural or political barriers and begin to transform the IT operations to become more efficient, more effective and less costly. That person can become a change agent that brings a competitive advantage to the organization so that data is not something that is merely moved about, reported periodically and stored for posterity, but becomes a part of the company’s business strategy, supporting the CEO’s vision and corporate objectives. This arrangement is very attractive for smaller and mid-sized companies, who can redirect time and resources away from their IT needs to tending to and growing their business.
Outsourcing the CIO position makes compelling business sense, and the opportunities in today’s climate abound.