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.
