IT outsourcing costs revealed
A new survey has provided a reminder to firms thinking of outsourcing their IT infrastructures that making the move simply in the hope of saving money may be a mistake.
A study by Compass Management Consulting of 240 IT outsourcing contracts found that by the final term of the deal, most service providers were charging between 30 and 45 per cent more than the average internal market rate.
The firm claims that falling prices for computer equipment and software has meant that many companies have been terminating their IT outsourcing deals early and returning work in-house.
"We are seeing up to 65 per cent of all outsourcing contracts worth over £20 million unravelling before running their full term," said Simon Scarrott, the head of business development with Compass.
"The costs to both parties of failure are high and legal and advisory costs can quickly escalate."
These findings indicate that IT outsourcing providers, if they cannot bring down their own costs, must concentrate on selling the productivity and efficiency benefits of their services to firms.
In addition, those companies thinking of outsourcing their IT departments simply to save money may wish to reconsider their options.
© Adfero Ltd
A study by Compass Management Consulting of 240 IT outsourcing contracts found that by the final term of the deal, most service providers were charging between 30 and 45 per cent more than the average internal market rate.
The firm claims that falling prices for computer equipment and software has meant that many companies have been terminating their IT outsourcing deals early and returning work in-house.
"We are seeing up to 65 per cent of all outsourcing contracts worth over £20 million unravelling before running their full term," said Simon Scarrott, the head of business development with Compass.
"The costs to both parties of failure are high and legal and advisory costs can quickly escalate."
These findings indicate that IT outsourcing providers, if they cannot bring down their own costs, must concentrate on selling the productivity and efficiency benefits of their services to firms.
In addition, those companies thinking of outsourcing their IT departments simply to save money may wish to reconsider their options.
© Adfero Ltd