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February 2016

IT outsourcing: What to do when your contract is about to end

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Outsourcing contracts worth billions are up for renewal in the next few years. In this special report, Computer Weekly examines how unprecedented change is complicating the CIO’s renewal decision.

Table Of Contents

  • According to ISG, there are nearly 3,000 IT outsourcing contracts worth more than $5m a year around the world coming up for renewal in the next three years – representing a combined total value of over $270bn (£175bn). Among them are 1,400 deals in Europe, the Middle East and Africa (EMEA) worth more than $14bn altogether. Accenture, Atos, BT, Capgemini, HP, IBM and TCS all have a large number of contracts coming to the end of term.
  • When its major IT deal with IBM (previously PwC), Fujitsu and Concentrix came up for renewal after 13 years and £1.6bn spent, the Driver & Vehicle Licensing Agency (DVLA) undertook a two-year project to bring it all back in-house. The move in-house brought more than 300 staff to the DVLA from the suppliers, taking its total IT workforce to over 630. The insourcing is expected to save the government agency at least £225m over 10 years on top of £70m on procurement costs. The DVLA plans to become an agile IT organisation.
  • Significant technology change will have taken place since old contracts now approaching renewal were first signed. CIOs need to know how cloud computing, automation and artificial intelligence can help them meet the aims of the business, but they also need to be able to spot a fad. This, though, is easier said than done as businesses enter the new territory of digital business.
  • Finding the best location – or mix of them – for IT services has become a more complicated task in recent years because CIOs have more options. Suppliers all around the world now offer IT and business process delivery services, all of which have their own advantages.