Scrutiny will make outsourcing more robust

Developments in the outsourcing world this week lead to the conclusion that big IT deals are, in future, going to come under much greater scrutiny from the various groups with a vested interest. But scrutiny doesn't automatically have to mean opposition and in the long-run it may actually make IT deals much more robust.

Outsourcing consultants and analysts agree that 'militant' shareholder groups – as seen with protests against 'fat cat' CEO pay rises and golden parachutes – are starting to turn their attention to big IT outsourcing deals because of the growing realisation of just how key these can be to the future performance of a company.

Traditionally CEOs serve for no more than a few years and while a deal agreed on the golf course to save hundreds of millions of pounds by farming off the IT function to someone else may look good on the books, if that is the sole reason you can be sure it will end in tears.

Shareholders now realise that outsourcing is pretty much an irreversible cultural and organisational change – once those jobs, skills and IP are gone they are gone for good – and want assurances that deals are being signed for the right reasons and are flexible enough to support future business opportunities.

There has also been an increase recently in unions putting more pressure on outsourcing deals, as seen with the $600m Bank of Ireland and Hewlett Packard deal. There may be cost savings in it but the 500 staff are concerned about the protection of their rights if they transfer to the alien culture of a multinational IT vendor and have already used strikes to hit home the message.

This could yet get worse for the bank, which faces "total war" with its employees if a compromise is rejected, but the pressure has led to a period of close consultation with staff that has secured guarantees covering most of their concerns.

This highlights the fact that in the current climate users and service providers cannot afford to ignore the very real worries of staff if a deal is to be successful, with buy-in from all parties.

Cost savings are, and will always be, a fundamental driver for outsourcing IT. But let's be clear - increased stakeholder scrutiny and pressure will ensure cost is not the sole reason and that the risks involved in such a major change will be minimised and will support the long-term business strategy of the company.