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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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About the Author

Over the past 25 years, Vivek Sood (Mr. Supply Chain) has been privileged to work alongside the CEOs & executives who care about their businesses as much as he does about delivering exceptional results in business transformations for them. Combining operational experience with over 400 strategic projects covering more than 85 countries taught him a lot - a legacy he continues to share. Want to know more? Go to viveksood.com to read the story of his professional and personal adventures, including the time when he had to fight real-life pirates.

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