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Nov 03

Why Do So Many Outsourcing Arrangements Fail? 

It is common knowledge that the failure rate of complex outsourcing arrangement remains stubbornly over 50% depending on which survey you read. With such a long history and accumulated lessons from outsourcing, this is simply unacceptable. 

However, it is not only outsourced projects that fail. Internal projects – especially large scale IT systems development or technological developments have an equally unimpressive track record. For an amusing example of the reasons, I encourage the reader to peruse this blog post:

 "WHY ARE SOFTWARE DEVELOPMENT ESTIMATES REGULARLY OFF ?"

So, what exactly  do we do in the preparation stage? We should ask and answer several key questions:

  • What are the services to be outsourced? Why? How does this plan fit with our corporate strategy?
  • What are the Key Service parameters? How will we know that the outsourced service is meeting our strategic objectives?
  • What budget for Service?
  • How many Service Companies?
  • How long contracts? 
  • How to select Service Companies?
  • How to manage relationship/s?

So what happens when you fail to prepare? The obvious answer is that the outsourcing arrangement turns out to be sub-optimal, and sometimes even disastrous. 

If you are looking to make perfect Outsourcing Strategies without failure Risk factor, Buy Book Outsourcing3.0

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