IT Outsourcing: British Petroleum’s Competitive Approach

In 1993, BP Exploration Operating Company, the $13 billion division of British Petroleum Company that explores for and produces oil and gas, outsourced all its information technology operations in an effort to cut costs, gain more flexible and higher-quality IT resources, and focus the IT department on activities that directly improve the overall business. We at BP Exploration, like many other managers at companies across Europe and North America, had concluded that the company no longer needed to own the technologies that provide business information to employees. The market for technology services had matured during the previous decade, and it now offered companies like ours a broad array of high-quality choices. Additionally, the problems encountered in most internal IT departments, with their mix of old and new machines and skills and their traditional tendency to focus on technological details rather than on business issues, distracted senior IT management and frustrated executives. We believed the marketplace offered us an opportunity to trade ownership for results.