Whether you are a parent or CIO, letting go is never easy. While a parent seeing a child off to college can at least look forward to holiday reunions, an insurance technologist passing off an internal function to a third party may well be seeing it for the last time. Yet, just as college education is widely viewed as a necessity in the workforce, the rationale for insurers outsourcing non-core IT functions also is gaining credence among insurers. While most insurers have the wherewithal to accomplish a range of IT functions for themselves, the question is why. Indeed, carriers burdened with a complex IT environment may view outsourcing as a way to simplify their infrastructure, allowing them to concentrate on core competencies, assaying risk. "They are starting to question what it means to be an insurance company and define the activities they need to keep at the heart of their business versus the things they need to do at an average, minimal level," says Kimberly Harris-Ferrante, research VP at Stamford, Conn.-based Gartner Inc.

Like nearly everything else in the data center, you can trace the roots of ITO all the way back to the mainframe era. Since then, ITO has gone through a number of evolutions. In the early part of this decade, ITO became closely associated with offshoring as companies based in India joined the ranks of traditional ITO providers such as IBM, Electronic Data Systems Corp. and Computer Sciences Corp., and insurers looked to tap a newly available global outsourcing workforce as a way to shave costs. In addition to cost savings, outsourcers are now increasingly being asked to provide their design and management expertise.

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