Avoid surprises. Uncover, measure, and mitigate hidden costs of outsourcing.
- Business and IT leaders have come under increasing pressure to cut costs, in part due to hype surrounding the cost-cutting potential of outsourcing.
- Outsourcing projects frequently go over budget and fail to deliver the promised cost savings.
- IT leaders hesitate to use outsourcing when the final project costs are highly unpredictable.
Our Advice
Critical Insight
- Info-Tech identifies seven hidden costs of outsourcing that, on average, add 25% to the overall cost of an engagement.
- IT leaders underestimate the magnitude of each of these costs at least 20% of the time. Effective management of outsourcing requires the IT leader to correctly budget for and take steps to reduce these hidden costs.
- Each of the costs manifests in a different way for application and infrastructure outsourcing, but apps and infra engagements mostly experience the costs with the same frequency and magnitude.
- While large, brand name outsourcing vendors offer a host of client management services, these services do not reduce the likelihood that hidden costs will creep up on clients.
Impact and Result
- Find the risk of each hidden cost for your outsourcing project pertinent to your outsourcing engagement characteristics and your organization characteristics.
- Manage your outsourcing engagement to reduce hidden costs and increase your net benefit.
- Decrease hidden costs both for contracts that are already signed, as well as contracts that are up for review or renewal.
- Calculate the net outsourcing cost you can expect with each available vendor.
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