Outsourcing is a US $180 billion-plus industry with more than 75 percent of IT organizations using it in some form.1 Outsourcing of some or all of the services within larger companies is seen as a way to contain, if not diminish, costs and simultaneously increase control over revenue utilization. The increasing costs arise, to a substantial extent, from the difficulty of retaining internal technical expertise in a 24x7x365 global, dynamic market. A strategic organizational response is to disaggregate the value chain and push the service provision out to third parties. There is a perception that the result will be quicker and faster service that will cope more expeditiously to gain advantage from technological evolution. Another hope is that the specialist suppliers will adapt more readily in the face of regulatory pace and evolution, especially in the global environment where regulations with outwardly similar intent may require substantially different, and sometimes conflicting, enablement. The only way to ensure a consistency of service provision is to implement an approach that regulates and assists the interface between client and supplier. This is the function of the governance of outsourcing. It is no longer a company’s ownership of capabilities that matters but rather its ability to control and make the most of critical capabilities, whether or not they reside on the company’s balance sheet.

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