have you been involved in many IT outsourcing agreements? Cost is always a major factor in procurement, and in IT where there can be a strong market for lemons, it's often the key factor.

A company that's more expensive and can't clearly demonstrate in a bid scenario the positive impact of that increase in costs, will lose bids, a lot.

Of course cost is a major factor. I never disputed that. I'm saying that competing on price alone is undesirable for IT outsourcing companies.

But the problem is that factors like security and reliability are often invisible in outsourcing contracts, as it's very hard to specify things like security exactly in a bid contract, and very hard for customers to tell the difference between an organisation with higher security and one with poorer security practices.

Everyone will say they take security seriously, but the cost of actually doing a good job on security is much higher than paying lipservice to it, so it doesn't really make commercial sense to do it well.

In general in fact I'd say that a lot of IT outsourcing contracts tend to lead to a market for lemons. It's very hard for customer to assess the quality of a companies staff for example, so the company with the cheaper staff can afford a cheaper bid, which looks just as good as a company with more expensive staff...

Granted, security is difficult to specify. But availabilty isn't. Not on the scale we're seeing right now with BA.

You are right, but they all do it because outsourcing is a signal that corporate management has lost faith in its ability to manage IT and now has but one method of judging value - price.