Outsourced IT to return home

By Lynn Tan, ZDNet Asia
Monday , November 06 2006 05:39 PM

SINGAPORE--The next wave of outsourcing is expected to see companies in Asia taking back selected IT functions, according to a senior executive at Big Four accounting firm KPMG.

Speaking at the Outsourcing Conference 2006 last week, Lim Yen Suan, KPMG Business Advisory's head of business performance services, said organizations are taking back some IT functions such as IT strategy and architecturing, from service providers.

"Usually, [companies in the Asia-Pacific region] outsource the maintenance, application development, network management and infrastructure," Lim told ZDNet Asia in an interview. "The rest they still very much keep within their own organization."

KPMG's latest survey showed that some call center functions have also been brought back in-house by enterprise customers in the region, primarily because of language and cultural issues, she said. Lim added that companies in the Asia-Pacific region are comparatively more conservative, and only outsource basic IT functions such as software development and application maintenance.

The survey also showed that there is a greater emphasis toward a partnership arrangement between enterprises and their service providers, rather than the client-service provider approach previously adopted in the first wave of outsourcing.

As such, the selection process for service providers is also changing, she said. Lim explained that companies that experienced the first wave of outsourcing--which was quantitative and technology focused--are now considering qualitative factors, such as cultural compatibility and business values of service providers.

"[Businesses] focus a lot on chemistry between themselves and the service providers because [the outsourcing contract] is a fairly long-term arrangement," she said.

According to Lim, enterprises take the selection process seriously because they are looking for a "business partner rather than a pure service provider", since the outsourcing arrangement will have a huge impact--whether it will be successful or not--on their business operations.

She added that this approach will allow both the organization and the service provider to obtain more transparency out of each other's processes and infrastructure, helping both parties achieve a win-win arrangement.

However, the trend toward a two-way partner relationship will be played out in terms of the way both parties work with each other, rather than as a contractual arrangement, she said. And it is not likely to take place immediately, Lim said.

She noted that the fledgling trend is likely to take off in the Asia-Pacific region in three to five years, and early adopters are expected to include MNCs (multinational corporations) from the United States and Europe that have presence in this region.

Early last month, Asia-Pacific's first certification program for IT outsourcing management--the Certification in Outsourcing Management for IT (COMIT)-- was launched in Singapore by the Singapore Computer Society, in partnership with Singapore's Institute of System Science and supported by the Infocomm Development Authority of Singapore. Endorsed by industry practitioners, the new three-day certification course is targeted at infocomm professionals seeking to pursue a career as IT project manager or outsourcing manager, as well as experienced professionals who want to attain accredited professional qualification.