By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.
Users generally want the price of an outsourced service to fall during an outsourcing contract, but suppliers are under pressure to make more sales and increase their prices, according to Martyn Hart, chairman of the National Outsourcing Association.
Users want to avoid surprises and get regular updates of the technology and an innovative service, whereas suppliers want more profits and sales, he said.
The National Outsourcing Association, which represents both users and suppliers, is researching a new form of contract that could satisfy both parties.
This would require the supplier to reveal to the user their profit margin on an agreed quality of service. To help improve service quality and incentivise the supplier, the profit margin would be split, with half going directly to the supplier and the remainder invested to create new services and innovative ways of working.
This innovative approach to outsourcing contracts will form part of a revised code of practice by the National Outsourcing Association, which will be produced later this year.
Hart cited outsourcing deals between National Savings and Investment and Siemens Business Services, and between Xansa and BT, as examples of successful outsourcing relationships.
He advised IT directors to meet their counterparts at the suppliers when negotiating an outsourcing contract and to have service level agreements that are written in business terms rather than technology jargon.