News
IT Business outsourcing
02 June, 2009
With a prediction that the global outsourcing market will grow by 8% this year, it would appear that outsourcing IT business could be the answer. Outsourcing can help businesses save time, reduce costs and make effective use of the knowledge and technical resources available during the recession.
However, just recently some reports have put forward that this could be a costly mistake. As companies emerge from the recession they could lack innovation and find themselves locked into contracts that are difficult to re-negotiate.
The director of the outsourcing unit at the London School of Economics and Political Science - Leslie Willcocks - has said that when the recession hit, companies hesitated in making decisions and therefore some contractors proposed waivering fees in an attempt to get contracts signed.
It is also reported that companies have locked themselves into some dicey short-term and cost-cutting agreements that will be difficult to untangle further down the line. Alternatively they have looked for greater cost reductions and have accepted the lowest bids with the drive to cut costs being paramount.
One of the surveys (of more than 100 companies) shows that 31% of lawyers and service providers are planning to outsource more IT, with 28% re-negotiating their IT outsourcing contracts in an attempt to attain more value during the recession. A total of 73% is in the process of breaking existing single outsourcing contracts and considering multiple providers.
Professor Willcocks has advised that if one must outsource, this should be restricted to fewer than 5 suppliers as anything over that becomes unmanageable, Companies must look at all the reasons for outsourcing, as in his words “It is no good just doing what you have been doing, just at a lower cost.”
The benefits of outsourcing can be substantial if all aspects are duly considered.