Bonuses drive bad deals

IT directors in UK companies will sign a record number of "bad" IT outsourcing deals over the next 18 months in a cynical attempt...

IT directors in UK companies will sign a record number of "bad" IT outsourcing deals over the next 18 months in a cynical attempt to save money and receive bonuses, analyst firm Gartner has warned.

In response to the economic downturn companies across Europe will sign long-term contracts with outsourcing suppliers that promise short-term cost savings, Gartner's IT Services and Sourcing Conference was told earlier this week.

However, this short-termism is likely to rebound on companies because too little attention has been paid to how the contract will be managed over five or 10 years.

"It is a particularly cynical attitude driven by the need to cut costs," said Roger Cox, vice-president for sourcing management at Gartner.

A hastily signed outsourcing contract often means that the IT service is unable to change with the rapidly evolving needs of business, for instance, when it acquires another company.

Gartner advises firms to develop a common approach to sourcing services and have procedures in place to manage the outsourced service in the long term before signing the contract.

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