DBS paid $1.2B to IBM in an outsourcing contract for 10 years in 2002. As part of the deal, 500 DBS employees who formed the IT team were hired by IBM[Link] in one of the largest outsourcing deals ever in Singapore. Outsourcing became fashionable about 10 years ago and there was a rush by companies to outsource their inhouse non-core activities to other companies. You wonder how IBM which simply took over the staff from DBS can do a better cheaper job and still turn a profit for itself doing essentially the same thing DBS was doing inhouse. I'm not here to condemn IBM or DBS for the recent debacle - there's enough of that by other bloggers and netizens already. I'm familiar with IT systems and can understand how small mistakes can lead to severe consequences. In this case, it was reported that the IBM maintenance team was given a set of just outdated (outdated by a few days?) procedure by a regional team and that led to the shutdown. Quite unlucky....and you can feel sorry for the engineers who simply followed the wrong instructions given to them leading to the mess. At the end of the day, it could boil down to one person looking up the wrong instructions....this type of human error cannot be avoided unless other checks and processes are in place e.g. someone else has to sign off the instructions and so on. But sometimes systems are so complex, you cannot tell that the set of instructions are so critical and there is just no way to prevent it unless you put in checks all over the place which can be quite inefficient. So even IBM makes mistakes just like everyone else....but you notice how quickly the blame shifts from DBS to IBM and because it is IBM a big established brand name. Suppose the same 500 staff from DBS formed a company called XYZ and DBS gave the contract to them and the same thing happened, it is harder for DBS to offload the blame to a no-branded company. If DBS had not outsourced to IBM, it would have to take all the blame on its own.
When I started work many years ago, I was tasked to buy a piece of computing equipment. I looked around and the best deal was from a lesser known (no brand) company which sold the equipment for half the price of similar HP and IBM equipment. It did some checks and found that the equipment was really value for money but was given advice by a more experienced colleague not to buy it. The logic is like this - if it is IBM and it breaks down, the management will blame IBM.... but if I buy an unknown brand equipment and it breaks down, they will blame me for choosing the no brand one even though I did a proper assessment. I won't tell you what I eventually bought but in most companies, people will buy the branded equipment because they rather use the company's money to buy something more expensive than to take on the risk and responsibility. The difference in this type of decisions is the result of company culture and the willingness of people to take responsibility and risk ultimately determines of a company can compete and survive. Many companies start off small and lean then before they find success. When they become richer, they can lose the 'can do' spirit and the management starts hiding behind consultants who are hired for expertise they are suppose to possess so that they can blame the consultant for bad decisions...when responsibility and blame can be outsourced by paying money ...why not.