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Squeezing IT Infrastructure for Cost Savings: Is There More to Extract?
By Michael Shott, Managing Consultant, Alsbridge Inc.

For the past 20 years or so, corporate management has looked to information technology (IT) services as a means to reduce overall annual costs. When all the internal cost reduction strategies had been squeezed dry, IT leaders turned to outsourcing to realize additional IT cost savings through leveraged service offerings, labor reductions via better tools and processes, and competition between the outsourcing service providers.

Once those IT cost savings were maximized, IT leaders went "offshore" to find even more IT cost reduction through labor arbitrage. Both offshore service providers and US-based service providers with offshore operations were able to offer IT cost savings over the onshore solutions due to lower labor costs of IT professionals located in parts of the world like India and Malaysia.

While there are some enterprise companies that have not fully leveraged outsourcing and/or offshoring to its full potential, most Fortune 500 companies have. These IT management teams have already been through several internal cycles of cost reduction strategies through layoffs, hardware/capital reductions, application rationalizations, consolidations, and more. And yet these companies are still seeking more opportunities to save IT costs in today’s unsettled economic environment.

Due to the availability of better IT cost savings tools and the standardization of IT environments, IT leaders are beginning to examine the possibility of taking some services traditionally outsourced to a service provider out of their contracts and back in-house. This changing trend has clients asking outsourcing providers to further break down their pricing by the IT service towers to enable them to pick and choose what they want to have in-house and outsourced. This white paper will explain where you might be able to squeeze your infrastructure for more IT cost savings.

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