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Even while the outsourcing industry is experiencing growth, a number of well-publicized outsourcing failures have occurred. In my own backyard, Mutual of New York (MONY) initiated and subsequently cancelled a $210 million outsourcing contract with Computer Sciences Corp. a little more than three years into a seven-year deal. Is this an indication of naive enthusiasm by senior management, desperate to rein in IT expenditures, and willing to take long-odds risks on ill-conceived outsourcing deals that are destined to failure? Is there evidence that CIOs may h ave become more jaded in their view of outsourcing as a cost-savings strategy? Has management's use of outsourcing as a threat to employees become a little more hollow in an era of high market demand for talented professionals?

I think the answer to all three is a resounding yes. The days when outsourcing was viewed as a cost-saving quick fix for all the ills of the IT organization are gone. That doesn't mean that outsourcing is dead. The smart money is on a more tactical approach that recognizes IT expenditures--particularly those related to network development--as strategic investments that cannot be off-loaded to hired guns without significant risk.

One-on-One to 15 Let's first try to get our arms around the term. The media tends to focus attention on high-profile radical outsourcing contracts where a large organization's entire IT operation is contracted out. Its motivation is no different, radicals might argue, than a professional sports team outsourcing its concession operation. Managers may reason that running an IT operation is not a core competency and that by off-loading this responsibility, they can concentrate on their real business objectives. They may have lost confidence in their IT staff's ability to deliver simple solutions to complex problems, or become frustrated by their own inability to hire and retain qualified people. They may be looking to reduce escalating employee benefits expenditures or to minimize risks associated with the implementation of new technologies. Nearly all these reasons are born of a combination of ignorance and desperation.

Radical outsourcing implies delegating strategic IT decision-making to an entity outside one's own organization. By entrusting your information infrastructure to an outsider, you diminish both control and flexibility, and you do so on the outsourcer's terms--typically with a lengthy and complex contract that ignores the painful reality of an industry transforming itself every 18 months. We'd all like a free ride--one that flattens t he bumps on the information roller-coaster--but the odds of landing such a deal are nearly as long as those of me taking Michael Jordan in a game of one-on-one.