News and views on IT Outsourcing.
One effect of the recession has been the number of outsourcing deals signed in haste to reduce an organisationâ€™s costs. A recent report by the London School of Economics suggests that many of these deals will be terminated shortly on the grounds that they are not appropriate for business as the economy improves.
Coupled with the fact that many older outsourcing deals will come up for renewal or rebidding then now could be a good time to review your approach and your contract terms.
A recent study by the University of Warwick (sponsored by Cognizant) reveals that only 8% of businesses know how much is spent on their outsourcing contracts.
The sample is based on interviews with 263 companies across Europe with turnovers between Â£300m and Â£600m.
Only 39% believe the financial contribution of outsourcing can be assesssed at all
Over 50% did not measure the financial and other benefits originating from their outsourcing contracts.
In the early days of outsourcing, businesses looked for IT service providers to reduce costs. Cost-reduction came from areas such as shared service models, shared operations infrastructure (firewalls, switches, disaster recovery sites), and elimination of IT staff management issues (absence, overtime payments). There was a tacit understanding that services would be delivered to the same standard as those provided in-house.