January 2024. Deloitte Canada signed an agreement with Canada Post as its outsourced IT service provider. Vodafone signed a 10-year deal with Microsoft. Eviden signed a $2.8 billion five-year agreement, also with Microsoft. Welcome to the coming of age of IT outsourcing as companies fill the gaps in talent, tech and growth with service providers that can meet their varied demands. According to Gartner, the growth in IT services spend will see it become the largest segment of IT spend for the first time at 8.7% and $1.5 trillion.
This change in spend and focus is also changing the role of the Chief Information Officer (CIO). Always a strategic and skilled thinker with one foot in the future, the CIO’s value proposition is shifting to become more that of the conductor of a vast IT orchestra of commoditized services, support and talent.
“With technology advancing at speed, the increasing demands on robust cybersecurity, and the cost-cutting demands that come with operating in Africa, outsourcing is definitely gaining traction on the continent,” says Michélle Janse van Rensburg, a digital transformation specialist in South Africa. “It allows for the CIO to gain access to niche skills and services that they can then orchestrate from within.”
CIOs are being given the space to get even closer to the business and address business problems at speed and to deftly navigate the talent challenge that remains just that – a challenge. According to Gartner’s forecast, the cost of salaries is expected to rise by 6% which means CIOs are spending more money on fewer employees at a time when they need more hands on digital decks. Outsourced means access to people when almost 60% of IT pros are looking for jobs other than the ones they currently have under their CIOs.
While this talent shift may yet change in the future – although Gartner predicts this is unlikely to happen – the CIO today has to find a way of modifying their approaches so they can better capture the value within their existing workforce while leveraging the skillsets from an array of service providers.
“The CIO is not just the custodian of IT, but the mind behind how to use these as a catalyst for business growth,” says Vishal Barapatre, Group Chief Technology Officer at In2IT Technologies in South Africa. “It is the CIO who will determine whether the business will manage 10 or more vendors, or if the company will consolidate spend into two. They are ultimately the ones who ensure there is solid engagement and service delivery across all vendors and that timelines are met and costs reduced. Their strength lies in accelerating initiatives across multiple vendors and projects.”
The adjustment to, as CIO puts it ‘Orchestrator in Chief’, is also allowing for the CIO to become more flexible, giving them room to stretch into their own skillsets and capabilities. As outsourced teams take on the admin and support, the CIO has the space to focus on innovation, technology changes, and how the business can benefit from new solutions and approaches.
“There is also the added value of having access to a global IT market,” says Koen Matthijssen, CTO at Fetola in Africa. “Many European companies now look to Africa for their talent, not just because of the rates, but because of their skills and maturity. The same applies in reverse – African companies can capture global talent to boost their own technology innovation and maturity.”
The CIO is then as much a strategic advisor as cultural melting pot manager, a person capable of weaving every personality and nationality into the fabric of the organisation. As Alan Turnley-Jones, CEO of Dimension Data Middle East and Africa, concludes: “CIOs are business partners with clear strategic advisory and a deep understanding of what they need their outsourcing partner to provide.”