Are we seeing first wave of recession proof outsourcing contracts in trouble?

I am currently working on a feature about renegotiating IT outsourcing contracts. As a result I have contacted people in the sector to get their views. As I go through some of the comments I get some interesting stuff.

Kit Burden, Kit Burden, head of technology sourcing at law firm DLA Piper, said there have been a lot of renegotiations as a result of a need to change contracts signed quickly by businesses to help them cope with recession.

“We are seeing the first wave of deals done in haste during the first stages of the recession, which are in trouble and needing to be reworked.”

Outsourcing is seen primarily by many as a way to cut costs. According to KPMG 70% of UK businesses see it as a way to cut costs.  Hence when the recession kicked-in companies would have looked at outsourcing to cut costs quickly.

Now that things have changed, although the economic outlook isn’t good, these contracts might not be appropriate. KPMG’s survey also revealed that businesses are increasingly outsourcing for other reasons than cost cutting. The survey found that 46% said the need for better quality services was their reason for outsourcing, while 51% said it was due to a lack of in-house skills.

Are your recession driven IT outsourcing contracts still relevant?

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