3rd Gen Outsourcing Model

3rd Generation IT Outsourcing Model

This term seems to have been coined by General Motors (GM), when GM moved from EDS as a single-source IT supplier, to the new model of dividing the whole IT chunk into smaller more manageable units to be executed by different vendors – the so called multi-sourcing scenario.

The challenge lies in following areas in this so called 3rd Gen Model:

The coordinator of the multi-sourced IT vendors, who also happens to be one of them
The end-to-end ownership of specific applications (development, performance and maintenance) – with the client washing-off their hands from it

Another important reason is the increasing concern and in fact demand from the business (read CEO) is how to create alignment of IT with business. In the earlier generations this was missed. IT Value measurement and alignment with business is the reason for trying to define the alignment as clearly as possible. I think the key of the 3rd Gen Outsourcing is IT alignment with Business Objectives where vendor works cohesively with the client and other outsourcing vendors in clearly aligning IT with business objectives.