Businesses are throwing billions of pounds at
IT outsourcing contracts despite having little understanding of
what they spend or get for their money, according to
research from
Warwick Business School.
According to the research, which was sponsored by
Indian offshore service provider Cognizant, only 8% of
businesses knew how much money and time was spent on outsourcing
contracts.
Over 263 companies were questioned across Europe, with revenues
between $500m and $1bn.
Over half of these businesses did not even measure the financial
benefits or disadvantages of the contracts they sign. Of those
businesses that have tried to measure the financial benefits of
outsourcing, less than 19% are very confident in their
calculation.
And CIOs are not good at communicating the benefits of
outsourcing, according to 67% of CFOs, said the research.
"The report flags a critical gap in managerial knowledge and
some businesses clearly have to do better in justifying their
significant outsourcing spend to the board, " said
Julia Kotlarsky,
associate professor of information systems at Warwick Business
School.