Time is ripe for IT outsourcing

28 Jan 2004

Irish companies can reduce costs, free up critical resources and increase profitability through outsourcing some or all of their IT activities, a seminar was told this morning.

Opening the event – jointly hosted by IBEC’s Telecoms & Internet Federation (TIF) and the Department of Communications, Marine and Natural Resources at Dublin’s Clontarf Castle – Peter Donnelly, managing director of EDS and chairman of the Hosted Services Interest Group within TIF, said: “IT outsourcing is a crucial service offered to all types of businesses. It enables them to focus on their own core competencies, allowing them to reduce costs and increase revenues.”

Roger O’Connor, director of business and technology in the Department of Communications, Marine and Natural Resources, gave an overview of the department’s broadband initiatives and efforts to establish Ireland as an e-hub. According to O’Connor, increased broadband coverage “will allow businesses to locate anywhere in Ireland, not just in major urban areas. The provision of broadband services will allow businesses to avail of IT outsourcing as a viable business option”.

Tommy McCabe, director of TIF, said it was important for the Irish marketplace to adopt new methods for conducting business. Modern technologies such as those used in IT outsourcing would increasingly determine competitive advantage and the productivity of Irish business. TIF believed more companies and their IT departments needed to embrace the outsourcing model, which has transformed other departments of their companies, said McCabe.

The practice of buying or contracting out information technology products and services has been slowing building for a number of years but there are signs that organisations are beginning to implement it in greater numbers. The largest outsourcing deal in Ireland to date was the decision announced by the Bank of Ireland last November to outsource its entire IT infrastructure to HP in a seven-year deal worth a reputed €600m.

A recent study commissioned by CMGLogica in the UK indicated that UK business could increase profits by €1.7bn and dramatically increase productivity through outsourcing. TIF estimates that Irish companies – particularly large ones – could increase productivity by 10pc through adopting the practice.

By Brian Skelly