Shape up or ship out

In the third of our four-part guide to outsourcing, we look at the in-demand skills

Believe it or not, there was once a time when anybody with a job in the IT department at a large organisation had a genuine right to consider their future as safe as houses.

But in the past five years, an unprecedented increase in the scale of UK IT outsourcing and offshoring means few IT professionals can afford to be so complacent.

With the exception of software development, where companies have employed freelance programmers for application building and amendment since the earliest days of computers, most IT roles were kept in-house.

Better use of communications, collaboration and remote management technology has changed that to a certain extent, but it is primarily cost and flexibility arguments that continue to lead firms to see more value in third-party provision of all kinds of IT services, including relatively straightforward tasks.

Mark Beaton, head of IT outsourcing at consultant Accenture, says the organisation is seeing an increased interest in outsourcing infrastructure management services, especially regarding datacentres. “This includes patching and security frameworks, as well as networks, servers and desktops, plus the stuff that helps companies manage that infrastructure,” he says.

And John Roguszczak, principal at specialist adviser Orbys Consulting, says all sorts of IT jobs are going from the in-house department to suppliers. “But the IT jobs market is still quite strong,” he says. “It is just a question of where different IT skills sit, whether with the customer or the supplier, and we are seeing that more with the supplier.”

There are no longer strong barriers defining what IT skills should remain in-house, says Ollie Ross, head of research at user group The Corporate IT Forum (Tif). At the same time, however, demand is constantly changing as the IT indust ry evolves to encompass new hardware, software and services.

“The skills argument is slightly different for all sorts of companies and all sorts of markets. It seems to depend on whatever technology is reaching an adoption tipping point,” says Ross.

Just as there is no rota of specific outsourcing roles, nor is there any guarantee that staff with a certain set of skills, knowledge or expertise will be kept in-house. But while the majority of jobs might head out the door, most organisations will always keep a subset of staff on home ground, says Marianne Kolding, associate vice president for European software and services at analyst IDC.

“Some very basic roles will stay in-house ­ – companies will always need somebody on hand to change a card in a laptop for example, or re-cable a computer room, and you cannot do that remotely,” she says.

And the staff companies are likely to retain are those who combine technical expertise with knowledge of multiple IT operations, especially where this includes systems architecture design and building experience.

“The jobs that are being kept in-house are the more high-value skills that encompass a range of abilities, such as development, infrastructure, desktop and systems architecture, for example,” says Roguszczak.

Nor is it likely that any organisation will completely outsource the entire IT department ­ – and everybody in it ­ – any time soon. Even if IT staff are not required for the provision of services themselves, firms will always require workers who understand the specific way IT is used to deliver business value – ­ if only to project manage and liaise with third-party suppliers.

“Organisations still need high-value skills within the organisation to understand what the supplier is doing. The thought that customers can outsource all their IT and not retain any skills in-house is just a fallacy,” says Roguszczak.

And for as long as people build new systems, Accenture’s Beaton says firms will still need technology skills within IT departments. “We are unlikely to ever get to a position where everything is fully outsourced,” he says. “Companies will always need new applications and new products, and will always change their systems architecture, and technology is right at the heart of that.”

In short, there are core IT skills that will always be needed close to home. But even though IT is hardly defunct as a viable career option, it might still be necessary for veteran workers to augment their skills and refocus existing experience. And individuals entering the IT profession for the first time should align their strategy to reflect new workplace demands.

Crucially, IT professionals may now find themselves under pressure to acquire more mainstream business skills to supplement their technical expertise.

John Middleditch, for example, has held a range of diverse IT roles including systems analyst, programmer, internal account manager and project manager during a career spanning more than 20 years. The chief technology officer at UK utility company E.ON says he has noticed massive change in what is expected from today’s IT professionals, much of it because of the outsourcing trend.

“When I first started, there was a great emphasis on people’s technical skills, but now there is a big shift to hybrid people who still have the technology skills but also speak the business language. You have to focus and engage to bridge the IT-business divide,” he says.

Orbys’ Roguszczak says modern IT professionals need to decide why they are working in IT, and choose whether they want to be technicians or whether they want to understand and fulfil the business need ­ – a choice likely to either take them in-house or to a third-party IT service supplier.

“If they want to work at the business end and apply IT to business, there will always be a demand for those type of skills, whether in systems analysis, relationship management or design skills,” he says. “But if they are in IT because they want to be a techie, they might need to review their career and look at working for a professional IT firm, such as Atos Origin, IBM, EDS or many of the smaller organisations such as Syan.”

Middleditch agrees that the industry is polarising to a certain extent; the big service providers have a lot of technical skills and internal people have change management skills.

“IT professionals have to decide which route they want to go down. If they take the technical route they are more likely to work for CSC, Logica or someone similar,” he says.

While workers with technical skills alone are more likely to be outsourced, there are in-house jobs for technology experts willing to improve their knowledge.

Tif’s Ross says such opportunities concentrate on working in other capacities besides IT, or gaining experience with outside suppliers or consultancies to see things from the other side.

“Anybody who wants to grow a long-term career in IT cannot walk out with pure computing skills, they have to get their hands dirty inside the business,” she says.

“Lots of firms pick up promising graduates and move them around the business ­ – through marketing, internal relations, business analysis and so on ­ – and today’s IT professionals are unlikely to have a straightforward path.”

Despite the transformation in the role of the UK IT professional, experts say training companies and educational establishments have so far done little to alter the content and focus of their courses to keep pace with the change.

Technical courses for popular systems and applications from the likes of Microsoft are still widely available, though Roguszczak says there is less training for classic outsourced roles such as help or service desk provision.

IDC’s Kolding says she has yet to see IT training or IT recruitment organisations alter their perspective, possibly because they are still deciding how to go about it.

“The trouble is that nobody has a good grasp yet of what skills are likely to stay in-house or even within European outsourcing companies – ­ it is impossible to say these are the new skills you need and if you have them, you will be safe,” she says.

Suitable training for modern IT roles is more likely to be provided in-house, says Ross ­ – either as part of a sandwich course or an internal apprenticeship. “I have only heard limited conversations about training, and mostly concerning security skills, but it seems that companies are willing to put promising individuals through external training courses as required,” she says.

Few experts believe the trend for IT outsourcing will ever be reversed, which means IT professionals will have to recognise that outsourcing will have a permanent impact on the UK skills market.

“We just have to accept that we are in a global skills market. There might be some knocks and challenges along the way, but ultimately it can only result in a stronger IT industry,” says Ross.

Next week: the final part of our definitive guide to outsourcing concentrates on the analyst and legal view

Six IT roles most likely to be outsourced

Software development
Traditionally the first thing to be outsourced in any company, given the project-oriented nature of the role where programmers can be based anywhere in the world and are paid by contracts rather than by the hour.

Infrastructure management
The days of the internal IT helpdesk have disappeared for many companies, with helpdesks outsourced to third parties for first-line problem resolution duties. Outsourced infrastructure management includes datacentre servers, local area networks, user desktop and laptop PCs, and application patch management in a single contract, though many companies prefer to divide individual elements between in-house and either single or multiple third-party providers.

Backup and storage
Rather than keeping data and data backups securely within their own sites, many companies choose to outsource responsibility for storage to third parties, often in conjunction with disaster recovery plans.

Application hosting
The emergence of software as a service technology has given new impetus and delivery methods to application outsourcing, though many providers have been hosting applications such as e-commerce, databases and email.

End-to-end testing
Many outsourcing companies have taken on responsibility for testing the ability of an organisation’s IT infrastructure to support specific technologies, applications or systems upgrades. Such testing can range from diagnosing readiness to support specific operating system refreshes, or carrying out more general performance diagnostic tests and taking software and hardware inventories.

Business process outsourcing
Technical IT support is one example of customer-related business process outsourcing (BPO), but there is a range of back-office outsourcing that involves a variety of software applications and IT functions, such as billing, purchasing and supply chain management. Customer-related BPO can also encompass call centre operations that involve customer relationship and marketing activities, which rely heavily on specific technologies such as IP telephony.

Does IT outsourcing appeal to some industry sectors more than others?

There is no distinct industry to speak of, but demand for IT outsourcing appears to come in business cycles, particularly where companies tend to have higher margins which are going through a bit of a squeeze, such as banking. You would expect to see a focus on cost reduction, and anticipate outsourcing as part of that.
Mark Beaton, head of IT outsourcing, Accenture

Outsourcing goes across the board now. Most organisations in most industry sectors have already implemented some degree of IT outsourcing, most often in the operational and support areas, and it is much harder to pinpoint specific industries.
John Roguszczak, principal, Orbys Consulting

Any industry sector is likely to outsource now. Generally, most large industries will consider outsourcing these days – the difference probably lies in how much they want people to know about it. Lots of executives from big service providers, for example, will tell you that they are seeing about 30 to 50 per cent of service delivery being done from an offshore location.
Marianne Kolding, associate vice president for European software and services, IDC

There do not seem to be any particular skills or industry sectors that are more likely to be outsourced now – it seems to be across the board and there has definitely been a shift in attitude. The cost savings have been understood and achieved, and now it is a case of whether companies can find people out there to do it better.
Ollie Ross, head of research, The Corporate IT Forum