Eighteen per cent of companies that outsource IT systems do
not save any money as a result, and costs rise for 9% of firms,
according to a report by People3, part of analyst firm
Gartner.
One of the main reasons for companies failing to cut costs through
outsourcing is the extra expense of managing the supplier, the
report said.
"There is an assumption by many companies that they can save a
large percentage of their budgets by outsourcing some or all of
their IT capabilities," said Lily Mok, senior consultant at
People3. "However, these savings are not always as promising as one
would expect."
Many firms overlook the cost of managing outsourcing contracts,
which averages 4.5% of the total contract value and can be as high
as 15%, she added.
Other costs faced by organisations outsourcing their IT that can be
hard to quantify include: costs in time and effort when the service
is being transferred, an increased turnover of IT staff, and lower
staff morale.
Of the 76 firms surveyed, 21% reported savings of more than 20%
from outsourcing.