CIO magazine recently weighed in on the subject in an article titled "7 Signs You've Outsourced Too Much to IT Service Providers."
Smart IT leaders understand that successful outsourcing requires a balance of internal and external skills. At a minimum, CIOs "need a sufficiently robust internal IT organization to keep the supplier honest, assist in dispute resolution and get maximum value from the relationship," says Bob Kriss, a partner and litigator in the outsourcing practice of Mayer Brown.
But it's a slippery slope. Once an organization gets a taste of the benefits of outsourcing one tower of IT service, appetites for further third-party provisioning naturally increase. Before long, the portfolio of outsourced IT work balloons, but the benefits begin to wane as the internal IT service organization grows anemic.
RETURN TO REGULAR TEXT: So what are the seven signs you've outsourced too much?
1. You have to bring in the service provider for CXO sit-downs. 2. You're drowning in change orders. 3. You've run out of meeting space. 4. The transaction costs outweigh the benefits. 5. Key members of the IT leadership team have morphed into contract jockeys. 6. You can no longer answer fundamental technology questions 7. No one's paying attention anymore – to the outsourced work or you.
CIO goes into detail on each of the seven points, and the article is well worth a read if you're starting to do a lot of IT outsourcing.