Can IT Outsourcing be a greener way to do business?

Published on
March 24, 2015

The global IT Outsourcing market is worth in excess of $250 billion and rising each year by 6.8% CAGR, demonstrating the rise in demand for Enterprises, the Public Sector & SME’s to outsource their IT requirements year on year. Companies elect to outsource for a number of reasons – to cut costs, to access cheaper resources and to achieve economies of scale. All of which are focused solely on the need to increase profits by decreasing operating expenses, it’s all about improving the bottom line.

Now that the bottom line has evolved into the triple bottom line, more organisations are beginning to realise the importance of the planet and people have in generating and sustaining profits. “But having a green focus will cost my company money” is the myth I often hear from ICT providers, Enterprises, Telecommunication companies and Managed Service Providers – but a myth this is.

This article will explore how organisations may be losing out on opportunities with potential partners & customers by being profit driven with no sustainability strategy. Business objectives in any industry are simple to understand – generate profits. However when it comes to IT Outsourcing, it’s now time to go green or go home.

Carbon Footprint, Energy Efficiency & Consumption Reduction

Whether it’s IT Networking, Mobile Apps or Cybersecurity, when IT functions are outsourced, the impact on an Organisation’s carbon footprint is positive. Take for example Company A, they have offices in over 50 countries and a central IT Department in country X. Now if Company A have an issue with their IT Network or an IT Security issue then they need to send an in-house Network Engineer or IT Security Expert to country X, Y and Z. The journey of the in-house employee will proceed by driving to the airport, flying to their international destination, then driving to the office in country X – already the carbon dioxide emissions emitted has damaged the atmosphere.

However if Company A decided to Outsource rather than send in-house staff on an around-the-world trip, significant reductions would be made in carbon emissions. Less petrol/diesel would be used as no/shorter car journeys would be necessary, no jet fuel consumed, no oil to maintain vehicles and no additional electricity – Same outcome but this time with a reduction in carbon emissions and at a fraction of the overall cost – sustainable savings.

Regulatory & Market Demand

Directors with their fat bonuses and Shareholders with their fat dividends shouldn’t be the only stakeholders to influence business decisions – listening to the demands of your customers and potential partners are just as important.

Customers now actively seek companies with strong green credentials and base their buying decisions on the strength of their green/sustainable credentials. So many products and services are homogenised that often the only point of difference between companies is to embrace sustainability – it’s no longer tree huggers and revolutionists demanding protection for the environment, it’s YOUR customers.

According to the Brown-Wilson Group’s Black Book of Outsourcing, 21% of EU & USA Organisations outsourcing specifies that green elements must be included in contracts, a figure which is set to double in the next 12 months. In the UK Public Sector, environmental regulations in procurement decisions stipulate that sustainability must be considered. Therefore public sector contracts are no longer driven by the cheapest prices, but the 3 P’s – Profit, People & the Planet.

Climate Change Agreements (CCA) allows energy intensive industries such as Data Centres to reduce their energy consumption for a reduction in levies. Data Centres have now reached a significant size and maturity that as an Industry they contribute to lowering national carbon emissions. With an increasing amount of organisations outsourcing their Data Centre needs, there is a direct correlation between IT Outsourcing & improving sustainability.

Service Level Agreements (SLA’s) is another area in IT Outsourcing whereby green-focused KPI’s are part of the contract terms. Mileage, emission reductions and sustainable materials are all part of modern-day “Green Contracts” and if your company isn’t prepared then it’s time to go green or go home.

Going green is no longer about box ticking and greenwashing, your end-customers demand it, your partners demand it and governments & legislation demand it. If your customers demanded a new product, one would be invented so when they demand a sustainably driven company, give them it. Do you think having a sustainability strategy in the world of IT helps or hinders IT Outsourcing?

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