Firms turn to IT outsourcing to lower costs

28 Oct 2009

The ability to concentrate on core business processes and cost savings are crucial reasons why firms opt for IT outsourcing, a new survey from Hibernia Evros Technology Group has revealed.

More than half of the firms surveyed (51pc) were Irish SMEs, employing between one and 250 people.

According to the survey, 63pc cited the capacity to focus on core business in the Top 2 reasons for outsourcing. Cost saving was the second most-popular reason, mentioned in their Top 2 choices by 51pc, while releasing internal IT staff for more strategic work was highlighted by almost half (47pc) of respondents.

Most common IT function outsourced

The most common IT function outsourced is hardware support (72pc) followed by web hosting (41pc). Network management and security/virus protection (both 38pc) are in the Top 4 outsourced IT functions.

“Irish firms have an increasingly sophisticated approach to outsourcing,” explains John Kennedy, marketing director, Hibernia Evros Technology Group.

“Market perception has been that Irish companies have been reluctant to outsource, but the results of this survey suggest otherwise, with 71pc already outsourcing some element of their IT. It may be that the economic downturn is encouraging companies to focus more on their core business and explore ways to reduce internal costs.”

Why not outsource?

The survey also asked those firms who do not outsource the reason why. More than a third (39pc) said the primary reason is that firms have sufficient in-house IT staff. A quarter said it was cheaper to manage IT in-house. Fear of loss of control was cited by just 12pc of those who do not currently outsource.

In addition, 41pc of the total sample said they had no fears about outsourcing, while a third said they did.

Of those who had fears, the No 1 barrier was security/confidentiality, which was highlighted by 46pc, while 29pc said they were reluctant to rely on an outside supplier. Difficulty in finding the right outsourcing partner was cited by 28pc.

“At a time when companies are looking to control costs we see increased interest in outsourcing. But there are genuine fears by those who do not currently outsource and these need to be managed by strict service-level agreements and perhaps initially outsourcing part of their IT infrastructure,” said Kennedy.

“The survey suggests that many IT managers are looking to develop into more strategic business roles than simply keeping the lights on.”  

More than 40pc of respondents were at IT director, CIO or IT manager level.

In total, 107 IT professionals participated in the outsourcing survey, which was conducted by Ellwood Market Research on behalf of Hibernia Evros Technology Group.

By Carmel Doyle

Photo: At the announcement of a new survey on Irish company attitudes to IT outsourcing are, from left, Bob Murray, joint managing director and John Kennedy, marketing director, Hibernia Evros Technology Group.


Carmel Doyle was a long-time reporter with Silicon Republic