Outsourcing users taken by surprise

Most IT outsourcing projects are doomed before they start because businesses are not putting enough effort into initial management and planning, a study has found.

Most IT outsourcing projects are doomed before they start because businesses are not putting enough effort into initial management and planning, a study has found.

Research by PA Consulting revealed that organisations are failing to invest in developing comprehensive business plans, skimping on due diligence investigations, and not giving enough thought as to how they will manage outsourcing contracts.

The result is that IT departments do not get the financial returns they expect and miss the opportunity to transform their companies, PA Consulting concluded.

"Businesses admitted to making a number of errors, often early on in the process where the business case is being developed. If you get the wrong start, you reap what you sow and the benefits are not realised," said Fons Kuijpers, head of IT sourcing at PA Consulting.

The research was based on a survey of 300 international company executives, plus interviews with lawyers and suppliers.

It found that only 42% of IT departments undertook any due diligence investigation when selecting their suppliers.

Firms were found to be failing to plan for the full costs of outsourcing in their business cases. Only 50% included the costs of running an internal organisation to manage the contact, and only 44% included the potential costs of change in their business cases.

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