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Industry Research : 42% of IT Outsourcing Agreements Cost More Than Originally Planned
The results of a survey released today show that IT outsourcing, instead of saving organizations money, actually ends up costing more - and in some cases significantly increases the bill. A survey of IT professionals at Infosecurity Europe 2012 in April finds that 42% of respondents reported that costs for their outsourcing agreements were higher than originally planned. Even more surprising, 64% believe that their IT outsourcer had actually invented projects with one ulterior motive - to inflate their fee.
The study, conducted by Lieberman Software Corporation, found that 71% of organizations outsource a ‘significant portion’ of their IT requirements. However, outsourcing didn’t automatically mean an improvement in service as just 15% said they trusted the quality of work performed by their outsourcers more than work performed in house; 52% felt the quality of service was about the same; while 33% have less trust in the work performed by the outsourcer.
Philip Lieberman, President and CEO of Lieberman Software, is not surprised. Speaking about the results he said, "What this survey confirms is that, unfortunately, increasing financial constraints put pressure on organizations to continue to cut costs. However, while on the surface IT outsourcing may seem the perfect solution, the reality is that the grass is not always greener and for some it’s actually a mirage. The fact that trust in the quality of work is being eroded is a worrying trend but, for me, the thought that work is being manufactured to inflate fees is even more of a concern." "IT, when used effectively, is increasingly a strategic tool for successful companies. In the coming decades, the winners will be those organizations that use technology to create differentiation that's difficult for competitors to match. For this reason, the decision to outsource should not be taken lightly. However, for those organizations that are going to do so, they must select their IT outsourced partner on an appropriate set of criteria – not just cost, but resiliency, transparency, data security and ultimately trust."
The survey took place at Infosecurity Europe 2012. Nearly 250 IT professionals participated, all of whom were partly or wholly responsible for an outsourcing function in their organizations.
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Published: Wednesday, June 6, 2012