Despite a poor track record in many states when it comes to outsourcing IT, consultants are advising North Carolina to let third parties handle key IT services. By outsourcing some services and consolidating others, North Carolina could save $76 million annually, the consultant firm TPI said in a recent report. The state has one of the highest budget deficits in the country, at more than $3 billion, reports Paul McDougall at InformationWeek. 

Services ripe for outsourcing including mainframe operations and Wide Area Network services, which together could save $43.4 million. The consultants recommended that the state turn over mainframe services to a cloud service provider that offers usage-based pricing. McDougall points out that IBM has the potential to benefit from this recommendation because of its sizable mainframe services and equipment business.

Services better suited to consolidation include help desk operations and servers, which could save $32.7 million, according to the report. The state's existing IT framework is not efficient, in part because it includes services operated partly by individual agencies, the consultants said. If the outsourcing and consolidation recommendations are followed, many IT workers could lose their jobs, however.

The consultant's plan for North Carolina comes with its share of risks, McDougall notes. Many states do not have a stellar track record when it comes to outsourcing. "The history of state outsourcing initiatives is replete with stories of cost overruns, missed deadlines, and service levels that actually declined once the outsourcer took over. Virginia, for instance, was recently forced to rework its $2.3 billion outsourcing deal with Northrop Grumman following a series of setbacks that led to the ouster of state CIO Lemuel Stewart," he writes.

For more:
- see Paul McDougall's article at InformationWeek

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