“If you do outsourcing right, and manage it well, you can significantly reduce costs,” he said.

A lack of skilled resources, sub-contracting costs, and the need to access best practices as well as a wider experience base were among the reasons his company opted to outsource a large part of its IT functions. In the initial three years MultiChoice reduced its costs by 34% in real terms and service levels had gone up by 15%, said Du Preez.

The costs associated with selecting service providers could be expected to be about 1% of the overall contract value, said Mophatlane. Citing other figures gleaned from a recent Gartner outsourcing event in the UK, he said the transition process might take up to 20% of the first year's billings. Managing service providers would cost between 2% and 4% of the annual cost.

The results of ITWeb's outsourcing survey, which ran online on www.itweb.co.za during April, were released at the event. Respondents cited a need for special skills, services and equipment; cost savings; and a desire to free up internal resources as their top three reasons for outsourcing.

Four percent of the respondents had outsourced all their IT functions, and 15% had outsourced more than half; 17% had not yet outsourced anything.