"Third Generation outsourcing is here!" exclaimed VirtualArk CEO Marty Gauvin, in the runup before his presentation at the Fifth International Cloud Expo at the Javits Center in New York. Driven by Cloud Computing, a new generation of outsourcing "stands to materially revolutionize and challenge traditional outsourcing models like no previous models have," according to the Australia-based executive.

"A lot of people, particularly at a conference such as this, talk about SaaS, PaaS, and IaaS," he noted. "I like to focus on the meaning of the last part of that phrase. What does 'as a service' mean?", he asked. "To me, it should be like making a phone call, flipping a light swithc, or hailing a cab."

 "Th e central idea behind outsourcing is that an enterprise should focus on what it does best and hire someone else to do the rest of the stuff," he noted. "The first generation is what I call 'your mess for less.'  The second generation, that is, the current generation involves more strategic--or selective--sourcing, including hosting."

Yet this current model results in a downside in which customers   "end up with complex relationships, multiple vendors, and a lot of fingerpointing as you try to determine responsibility for problems."  He pointed out that w ith second-generation outsourcing, "you still sign up for a specific number of seats. Today's outsourcing is too rigid, and the service models are limited."

He used the example of selling chocolates, saying that in Australia, 60 percent of the chocolates are sold in the six weeks before Easter. "Yet with traditional outsourcing, you're paying for the same amount of service each month," he noted. " Service levels need to vary to meet the requirements of the modern organization."

He also questioned as to why today's outsourcing involves long-term contracts. "Honestly, the reason you are locked into a three- to five-year contract term seems to be, interestingly, that this is about as long as one can make a server last."

Gauving alluded to some recent Gartner research, in which CIOs were interviewed and asked what they want. "They want to reduce IT compleixty and cost, make more of the budget variable, and make a tangent benefit to the buisness," Gauvin said.

 "So how can we change the outsouricng model based on the way the cloud works?" he asked. "Today, with third-generation outsourcing, there is no infrastructure at your site or the outsourcer's site. You pay as you use, and these levels are tied to the outsourcer. If you want, you don't have to have a term. (Imagine saying), I'd like to outsource this specific project for a day!" Gauvin concluded his presentation with an overview of his company's approach, and services, and how he believes this approach achieves "a tremendous shift" in the way companies do business.