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IT outsourcing deal size data shows decade-long decline

Stephanie Overby | Jan. 31, 2012
An analysis of last year's outsourcing activity reveals the continuation of a decade-long decline in deal size.

With little clarity around end-to-and responsibility, providers point the finger at each other or the client when service levels sink, and the customer spends an inordinate amount of time resolving disputes.

  • Lack of Supplier Collaboration

Real or perceived barriers to cooperation among outsourcing providers, such as concerns over intellectual property, thwart innovation and business change efforts.

  • Contracting Issues

With best practices for multisourcing contracts still in flux, the legal language of many deals leave customers wanting--such as poorly defined transition or transformation terms or ineffective service level agreements

  • Impotent Governance

From the client failing to take responsibility for the outsourcing portfolio to multiple governance organizations managing different contracts to inconsistent service management processes, multisourcing customers are flailing when it comes to day-to-day management.

Such management challenges have given rise to the latest outsourcing buzzword: service integration. In the most basic terms, it means coordinating and consolidating discrete services from multiple outsourcers to provide an end-to-end service to the business that meets performance, quality and cost objectives.

Both IT consultancies and, interestingly enough, IT outsourcers themselves may offer service integration. But mature outsourcing customers can also develop internal capabilities for managing multiple IT service providers. The key elements of multisourcing governance include clear delineation of roles and responsibilities, enterprise-to-enterprise processes, common metrics and reporting, shared management tools, risk management planning, and collaboration incentives. Whether such discipline is provided in-house or by a third-party, it's a necessity, says Keppel, as all signs point to multisourcing as the dominant ITO and BPO model for the foreseeable future. "The development of centers of excellence for sourcing and service management, as well as the outsourcing of some of the core elements of provider control, are now key components of best-of-breed approaches to enterprise-wide sourcing," Keppel says.


 

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