Deliberating over out-sourcing or in-sourcing? There is a third way!

Achieving sustainable innovation is forcing CIOs across all industries to rethink ‘sourcing’. In some ways, sustainability and sourcing go hand-in-hand. As much as sourcing challenges, sustainability and the notion of a circular economy have been in the spotlight in the food industry for the past year or more, the same issues are top of mind in IT. How can we source the best, re-use and deliver quality results with zero-waste?

This is an important challenge that struck me as vital to consider at the recent Noord Group CIO Dialogue in Dublin and I noted a couple of recurring themes when the CIOs attending were discussing challenges and trends:

1. As IT departments continue to face rising demands, there has been a distinct move towards in-sourcing any development that is considered core to the business or a strategic differentiator. Outsourcing is now mainly considered for IT that is more of a commodity (ERP maintenance and the like).
2. Coupled with the rise of in-sourcing is an exacerbation of the age-long challenge of hiring and, more importantly, retaining the best development staff. According to a 2018 report, Forrester found that 33% of global services decision makers indicated that they either didn’t have the right kind of developers or their developers didn’t have the right skills to get the job done.
3. Even if you do manage to retain your exceptionally talented staff (and some CIOs noted that it is not unusual for the best staff to move on in only 18 months), organisations often struggle with keeping their team skills up to date.

If the aim of in-sourcing is to develop a sustainable innovation engine to deliver differentiated technical solutions for your organisation, there is a better way…

Co-sourcing to deliver sustainable innovation

Most leaders will recognise that high levels of collaboration is now one of the key indicators of a successful, agile business: collaboration between team members, collaboration across silos. But even that is often not enough; digitally mature organisations also collaborate well outside their own organisational borders.

What does this look like? It usually means forming not just tactical, practical, outsourced partnerships with tech vendors, but more strategic co-sourced partnerships that augment your ability to innovate. Such partners often have expertise in particular niche areas and can work closely with your own employees to accelerate development and delivery of particular solutions. Often the unique combination of an organisation’s domain expertise with a partner’s technical expertise can result in differentiated offerings that even experienced internal teams would be challenged to deliver.

What are the advantages of investing in such a partnership?

★ If you have an urgent need to meet a business goal and you currently don’t have specific capability or capacity to deliver – working with a trusted partner can often deliver results quicker than any attempt to recruit a new high quality team, and get them working together efficiently. Many of the CIOs we talk to express how this is particularly useful for prototype work which may or may not turn into long term investments.
★ Churn rates for high quality technical staff are on the increase and replacing expert technical staff can take a lot of time. A specialist technology partner has much more of an incentive to work with you towards joint business goals over a longer term, and they are well used to managing ebb and flow of specialist staff while maintaining consistent high quality to their partners.
★ Staying up to date with latest technologies and methodologies is a constant challenge in this day and age. A specialist technology partner can not only bring news about best practices and innovation from different verticals, but, more importantly, can bring experience of how they are being used in different areas. Knowing potential pitfalls to avoid is key to successfully leveraging emerging technologies.
★ Often bringing in experience from across a range of projects and industries adds value to your in-house teams. The learnings they get as a result can often help in retention of the talent you have.

To sum up, the choice can depend on the specific organisation and point in time, but a partnership approach to co-sourcing can guarantee business continuity – which is a prerequisite in today’s faster-paced world – as well as innovation and speed-to-market. When pursuing such a collaborative arrangement, the ultimate goal is to create competitive advantage through the relationship, one where both parties have a shared vision of long term success.

Clare Dillon is Head of Strategic Partnerships at NearForm. You can connect with Clare at https://www.linkedin.com/in/claredillon/

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