Optimum Outsourcing

Research firm Gartner, based in Connecticut, projects that overall business spending on information technology is poised to rise 5.5 percent in 2006. Much of that cash will go for hardware, software, networking equipment, security measures, consumer products . . . in other words, almost everything except full-time IT personnel.

So who’s installing and maintaining all that shiny new gear? More and more, it’s somebody off site. For many businesses—especially smaller ones—having in-house IT staff makes about as much sense as a pizza delivery place hiring a full-time mechanic to keep its cars running.

That’s where outsourcing comes in—not the type associated with shipping U.S. jobs overseas, but rather the strategic use of outside service providers to perform selected, non–revenue producing work.

The IT functions that typically get farmed out include data processing, application development, system or network maintenance, systems integration, help-desk functions, service and support, IT training, Web hosting, e-commerce, security and anti-virus work, database administration, and ERP (enterprise resource planning) or business computing support.

Companies that turn to outside vendors often find that it saves them money and headaches, and enables them to better concentrate on what they do best—all the while having their technology needs met by experts with up-to-date equipment and training.

Studies show that almost $100 billion is spent on IT outsourcing each year, and that the industry is growing 6 percent annually. But the big picture may obscure the details: While outsourcing works wonders for one company, it could be the wrong move for another.