Wanted: chief sourcing officer

Companies need to spend up to 10 per cent of the value of outsourcing projects on building internal teams to manage them, according to Gartner.

The analyst is predicting the emergence of a chief sourcing officer, as outsourcing failures force companies to better manage contracts.

The trend towards outsourcing IT services, and particularly offshore outsourcing, has accelerated rapidly in the past 18 months.

Gartner predicts that by 2005 the majority of IT spending in Europe will be via outsourcing.

But most business have not developed a suitable structure to manage outsourcing relationships because most deals are aimed at slashing costs.

Gartner estimates that European companies waste €6bn on poorly managed deals each year.

The analyst maintained that companies should spend between five and 10 per cent of outsourcing costs on managing the projects, rather than the current two to five per cent.

Ian Marriott, vice president of IT services and sourcing at Gartner, said: "Two years ago, eight out of 10 customers would have expressed satisfaction with their outsourcing projects. Today it's five out of 10," said Marriott.

"Outsourcing is tough, expensive and a lot of companies don't have the skills to manage deals properly. You need the right people, processes and controls in place to make it work."

This will result in a growing demand for a chief sourcing officer, which Gartner likens to a "casting director".

The candidate would need a combination of business and technical skills, and would assume responsibility for maintaining and managing the relationship with suppliers.

But the analyst warned that it has yet to come across any company in Europe with a formal architecture in place.

"Companies don't have the skills they need to do this, and a lot of companies don't have the support at board level to staff these teams properly. The board just wants 40 per cent off the budget."