Half of all outsourcing deals failing

Outsourcing has become a buzzword for some CIOs – but with half of all outsourcing deals not living up to expectations, according to Gartner, how can CIOs make sure they're not left with egg on their faces?

Often companies enter into outsourcing deals that they are later forced to renegotiate substantially a year or 18 months later when they find out that the agreement isn't in line with their expectations.

So what's going wrong? Economic pressure on firms – and pressure on their CIOs from above – often leads to them rushing into outsourcing before they’ve really thought it through.

Gianluca Tramacere, Gartner analyst specialising in outsourcing in Europe, said that getting the most from any deal requires a lot of preparation on the end user's side. "Companies aren't doing enough homework," he said.

Tramacere told silicon.com that companies should ask themselves some hard questions before embarking on any outsourcing deal: "Why are they outsourcing? What are they outsourcing? They might want to consider doing some benchmarking. How will you define its success? Companies might want to work on governance – identifying roles and responsibilities. It may take time, but if you start outsourcing without outlining your strategy, you're looking for trouble."

Businesses often focus on the short-term cost-cutting benefits of opting for outsourcing, without realising the process may actually mean having to take on extra people in order to ensure there are staff with the right skills on hand to make the deal a success.

The tendency for outsourcing agreements to go pear-shaped could also be purely a matter of time, as the market starts to stabilise. As outsourcing becomes more commonplace, and companies have tried and tested strategies in place, the industry could well see such teething problems resolved.

"Outsourcing is an 'immature giant'," said Tramacere. "It's a huge market but it's still maturing."