The hidden cost of outsourcing IT

State of DevOps reports from DevOps Research and Assessment (DORA) have become a valued benchmark for progress in software engineering and business transformation.

To date, more than 30,000 IT professionals have taken part in DORA’s surveys. Responses are analysed to provide insights into organisational throughput (frequency of new software deployments) and stability (availability, change failure rate and time taken to restore a service). Based on these critical indicators, participating organisations are grouped as elite, high, medium or low performers.

The most recent report, 2018 Accelerate: State of DevOps, includes some interesting observations. One of these is a clear link between low performance and functional outsourcing. Since outsourcing is a mainstream strategy for many established businesses that are also looking to embrace transformation, this has set alarm bells ringing. Low-performing teams are 3.9 times more likely to use functional outsourcing (overall) than elite performance teams, and 3.2 times more likely to use outsourcing of any of the following functions: application development, IT operations work, or testing and QA.

In this paper, we explore the inherent problems of functional outsourcing and steps that can be taken to overcome them. We look at alternative models, shedding light on the importance of culture and workforce modernisation. And we share insights from BAE Systems’ transition from outsourcing to cross-functional multi-sourcing to drive better performance.

Our goal is to help businesses identify whether functional outsourcing could be stalling progress, then take a proactive stance to improve their outlook.