Outsourcing remains high on CIO agenda

Outsourcing remains high on the CIO agenda but there is still a huge gulf between the predicted and actual cost savings, according to new research.

The survey of more than 400 UK CIOs and IT directors by recruitment agency Harvey Nash found 81 per cent of respondents now outsource some of their IT, with cost cutting given as one of the main drivers.

But lower than expected cost savings was the top reason cited by CIOs for outsourcing having a negative effect on the business.

"Given that reducing cost was one of the main reasons CIOs gave for outsourcing, this was a worrying observation, and suggests there is still a gulf between the savings that CIOs expect to achieve and the savings that are actually being delivered," the report said.

The size of offshore outsourcing deals is up and a third of CIOs expect offshoring spend to increase in the next 12 months as businesses move from testing small projects to bigger deals, the study found.

There is also evidence the CIO role is broadening out into other business areas as IT leaders look for new challenges. The average length of service for CIOs has increased to more than six years but optimism about the market picking up means almost two-thirds of IT bosses don't expect to be with the same employer in two years time.

Two-thirds of CIOs have responsibility for areas outside IT including property, facilities management and business change and almost half are now members of the main operational board of the company, according to the research.

"Where once CIOs were considered simply as 'technical champions' they are now becoming increasingly involved in wider business issues and strategy. Clearly this requires a wider skill set, one that combines a strong technical background with the ability to be a positive leader, an effective communicator and a strong negotiator," the report said.

Decreasing bonuses over the last couple of years have led to more CIOs saying they are unhappy with their remuneration packages but the average annual salary for someone with an IT budget of more than £100m is £229,000. And CIOs are still better off than many of their fellow directors, with a personnel or HR director likely to pick up only £69,000 per year.