Interesting story on Computer Weekly this week about CSC and its 10 year loss making outsourcing contract with Royal Mail.
It seems the contract which won the National Outsourcing Association’s (NOA) innovation award and been shortlisted for the NOA’s IT Outsourcing Project of the Year yet is not making any money for CSC. In fact it is losing money and would lose a lot more if it were not for job cuts, tax breaks and relief payments.
So how can a potential outsourcing contract of the year not be making money for the supplier?
Read the story from Mark Ballard here.
Promising too much, delivering too little seems to be commonplace in today’s outsourcing contracts. This is probably part the reason why contract renegotiations are at a ten year high. It also sheds light on why suppliers are often as willing as customers to renegotiate.
If outsourcing is to work both parties need to get something out of it. If you can create mutually beneficial agreements service levels will go up. Here is a case study about how finance firm Old Mutual did it.