AT&T considers outsourcing IT functions

First it was the Internal Revenue Service. Now the computer industry is buzzing with reports that communication giant AT&T (Bedford Hills, NJ,

http://www.att.com) is considering farming out its IT operations.

For AT&T, the issue appears to be cost-cutting. John Walter, the company's new president and CEO, is out to cut AT&T's overhead by $2.5 billion a year. But the underlying cause may be something even more basic--core competency. A growing number of major corporations are finding it cost-effective to turn peripheral functions over to outside experts so that parent companies can concentrate on what they do best. It is the exact opposite of the conglomeration trend of the 1970s and 1980s.

In AT&T's case, it turns out that one of its subsidiaries may be able to do the IT job better than the parent company: AT&T Solutions, which currently runs a $750 million outsourcing business. But the firm hasn't ruled out bringing in IBM or EDS.

Do the events at AT&T and the IRS foreshadow major new growth in imaging and document management outsourcing, or are they just the result of special circumstances that don't pertain to most corporations? It's a question worth asking and a potential trend worth watching.