Choosing the right supplier is biggest outsourcing challenge

Finding the right supplier is the biggest IT outsourcing challenge companies face, according to research by outsourcing advisory...

Finding the right supplier is the biggest IT outsourcing challenge companies face, according to research by outsourcing advisory firm Morgan Chambers.

The study, which surveyed 115 IT directors and chief information officers (CIOs) from FTSE 250 companies, revealed that 53% of executives that have outsourced believe finding the correct supplier was the single most challenging factor in making their decision. This was closely followed by a fear of undue dependency on the supplier (47%).

Phil Morris, director at Morgan Chambers, said the figures underline the importance of taking a number of factors into consideration when choosing a supplier. "This should include culture fit, the technical capability of the supplier, its understanding of your business and the price," he said.

Despite the concerns about suppliers raised by respondents, the research suggests that companies are increasingly likely to turn to outsourcing in the future. Some 65% of IT bosses that are not currently outsourcing said they are likely to go down the outsourcing route in the next two years.

Companies that have outsourced were found to be generally content with the service they are receiving. Eighty six per cent of executives that have outsourced said they plan to continue outsourcing.

Morgan Chambers' findings come at a time when outsourcing has suffered a run of negative publicity. Computer Weekly revealed last month that the Bank of Scotland, which last year merged with Halifax Bank to form HBos, is to terminate its 10-year, £700m outsourcing contract with IBM and bring its IT back in-house.

However, the research seems to suggest that companies have not been put off by the experiences of HBos and IBM.

Morris also believes that companies are still likely to opt for five- to ten-year "mega deals" - and not just in the IT arena. "We are also likely to see mega deals in the likes of human resources," he said.

Morgan Chambers will be hosting a conference in Amsterdam in October to discuss its findings in full.

IT chiefs' top 10 reasons for outsourcing
  • Improving IT services and support

  • Lower IT costs

  • Better control of IT costs

  • Allows you to concentrate on core business

  • Access to IT staff and/or skills

  • Economies-of-scale and support

  • Improve flexibility of IT

  • Shorten time to market new applications and services

  • Focus on new technologies

  • Off-balance-sheet IT investment.

Source: Morgan Chambers

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