Those dissatisfied with outsourcing deals citied high costs, poor communications, and under-estimating the project's scope. By Mary Hayes Weier
InformationWeek
February 15, 2008 05:35 PM
Too many businesses take a short-sighted view of their outsourcing contracts, concludes Deloitte following a recent study.
The consulting firm found that while most business executives it surveyed are satisfied with the cost savings they get from outsourcing, most said outsourcing relationships had not led to important innovations or transformations.
Of the 300 business and IT executives involved in outsourcing deals surveyed by Deloitte, 70% said they were satisfied with their relationships, and 83% said outsourcing projects had met their return-on-investment goals, with an ROI averaging just above 25%. But only one in three executives surveyed said they had gained important benefits from innovative ideas or transformation of their operations.
The survey also found that businesses frequently suffer bad outsourcing relationships before finding the right one. Thirty-nine percent of respondents said they terminated at least one outsourcing contract and transferred it to a different vendor in their careers. Among those who reported dissatisfaction with a large contract, half brought the function back in house. Nearly two out of three of the executives dissatisfied with a large contract said the problems were escalated to senior management within the contract's first year, with half continuing to get senior management involved in the second year.
http://www.informationweek.com/news/showArticle.jhtml?articleID=206600007
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