Services such as catering, cleaning and security are widely outsourced even though they exist without constant pressure to implement new technology. These services tend to get outsourced because they are seen as separate businesses and they are easy to outsource because they are rarely entwined with other areas of the organization through technology in the way that IT and Finance are. With all other functions, however, the pressure to outsource is largely based on the desire to achieve a measure of competitiveness by utilizing the latest information systems. The fundamental competitiveness problem is, therefore, usually related to changes in technology even where HR, Finance, Call Centres and other functions are being outsourced. I accept that many of these BPO areas are outsourced without the management concerned even considering the information systems factor. However, even these managers will accept that it is the constant change brought about by the development of technology that is fuelling the organization-wide pressure to become competitive by outsourcing.

Quite clearly, the future technology needs of the organization is the most important area to deal with. There is a good argument for saying that until you are happy that the core IT function has reached a competitive standing and is likely to remain there, then other functions should not be subject to performance improvement projects.

Although outsourcing arrangements are fraught with problems, the use of external specialists offers the potential for improved service, cost reductions and continuous improvements that cannot normally be achieved by in-house teams that do not have the benefit of continuous external help and guidance. This factor will remain the main reason for outsourcing.

Projects covering a single function or group of functions that proceed on a ’fire-fighting’ basis are not normally suited to most organization’s real needs.

If a business function does not have the capacity to grow, it will not be able to attract the best and most skilled employees.

For an internal function to achieve continuous improvements it will normally need to be:

- core

- capable of continuous growth

- in a position to attract the best employees

- in a position to take on new clients.

For a service provider to perform well for an outsourcing client the following must apply:

- the provider must be an established specialist;

- the provider must be capable of recruiting top quality staff;

- the provider must be motivated;

- the client must be a very important customer.