Outsourcing out, insourcing in

Gartner reports that only 9% of CIOs plan to increase their outsourcing this year. With this trend comes an increase in insourcing.

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IT insourcing, or bringing previously outsourced IT functions back in-house, is on the rise, according to experts. Factors behind the increase include the global economic recession, IT outsourcing scandals, and the potential cost savings of decreasing the number of outsourced contracts. Companies are even pulling back some outsourced functions because they have found they don’t offer the speed and control that insourcing does.

Also, many companies have seen an increase in unhappy customers dealing with outsourced IT personnel.

According to the latest update to Gartner Inc.’s 2009 CIO Agenda survey, only 9% of CIOs said they plan to increase IT outsourcing this year. Many are even considering insourcing previously outsourced functions.

Many experts warned against outsourcing early on, saying that it’s very difficult to get sustainable cost savings out of it. Even though it has an initial cost benefit, the long-term can be problematic. For example, outsourcing companies may have added requirements that may drive up the price of the IT outsourcing contract when it’s time to renew.

I think many companies in the beginning of the rush to outsource also underestimated the impact customer dissatisfaction can have on the bottom line, especially in regard to call centers.