From Brexit to Texit - Five reasons for outsourcing your IT
Mark Flynn, solutions specialist, Modrus
As David Cameron brings home the supposed British bacon on his terms for staying in the E.U. and faces off with the likes of Boris Johnson, my mind wandered to a similar (well almost…) in or out debate I often get into with CEOs around outsourcing. Does a business get further faster by keeping IT in-House or going for "Texit" - outsourcing their technology to a specialist who can do it better, cheaper and faster?
Whether the UK should remain in the E.U. will be all of our responsibility to decide in June. CEOs have the responsibility for weighing up all the pros and cons of Texit, and it isn't always obvious what's right for the business. Hence I thought it would be useful - at the risk of pushing the parallels too far, to examine some of the key decision making criteria a bit more closely.
Here's how the Texit/Brexit parallels might look:
1. Economic impact
As no country has ever left the EU, it is difficult to determine the financial impact. Indeed, economists on both sides of the fence can put up a convincing financial case. Lots of crystal ball gazing all round.
With Texit things are a lot simpler economically. Tracking costs with customers who have gone the Texit route, it's clear that in most cases, the total technology cost per annum reduces by around one third - this factors in reduced IT team headcount, reduced hardware and software costs and elimination of CAPEX and depreciation.
2. Demographic concerns?
Nearly 2m people from the EU live and work in Britain - it is not clear what happens to these people if Britain exits.
People options in a Texit situation are usually straight forward. Either staff TUPE into the outsourcer - typically a bigger IT business offering broader IT career progression, or internal IT resources can be refocused away from "keeping the IT lights on" to developing and delivering IT strategy that drives business value, profitability and growth.
3. How would Britain trade with the EU?
Not being in the EU, doesn't mean we can't trade with Europe. There are many different trade agreements such as the so called favored "Norway option" as well as agreements in place with other trading partners around the world.
Texit offers different agreement types depending whether the right answer for your business is complete Texit - where the supplier takes responsibly for everything from keyboard to data centre, or only partial Texit. Just as Britain is a member of the EU but doesn't have the Euro as its currency, so Texit could be just about one element - for example server hosting.
4. What about punching beyond our weight on the international scene?
Brexit poses some risks to Britain’s foreign and security interests. The EU’s main foreign policy weapon is sanctions. The UK has been a driving force behind EU sanctions against Iran and Russia. The EU’s economic size means that its sanctions carry more weight than unilateral action by Britain.
With Texit the opposite is true, you get to punch above your weight; you get the IT department you'd ideally like, but which wouldn't make sense if you were building it yourself. When you sign up for Texit you get access to IT specialists in a whole variety of disciplines, and typically get that 24*7.
5. British public opinion?
Right after the last general election, 55% of the UK population stated it was in favour of staying in the E.U. But with the refugee crisis and the Paris terrorist attack the numbers in favour of continued E.U. membership took a sizeable hit – clearly the British public still needs convincing.
Where are the opinion polls with Texit?
According to the Business Services Association (BSA), almost 10% of the UK’s workforce is employed in outsourcing, accounting for 3.3m jobs. In the third quarter of 2015, £2.2 billion of outsourcing contracts were signed, an increase of 69% on the previous year. So as far as "voting with your feet" is concerned - and who knows just how far we may or may not be doing that in June - Texit seems to be getting a big tick on the ballot paper.
So quite soon we'll all be glad to see the back of Brexit, and who knows what may happen once the referendum results are known. I suspect that the Texit on the other hand - like any idea that has merits under the right circumstances - will run and run. What side of the Texit argument gets your vote?