A diamondcluster study finds one in five organizations outsourcing their IT has terminated the contract during the last year after failing to get the expected benefits. The study of 182 IT outsourcing buyers in the United States reveals:
- The overall level of satisfaction has increased as the market matures and IT bosses have more realistic expectations. Almost three-quarters said they are happy with their IT outsourcing efforts to date and out of the 21 per cent who terminated a deal in the last 12 months, half of those simply switched to another vendor. Only a quarter of those who terminated( read 5%) then brought the work back in-house.
- Three years back buyers expected cost savings in the region of up to 50 per cent but those expectations have declined to 10 to 20 per cent, along with the rates they are paying to outsourcing service providers.
- Buyers have moved on from the "outsourcing euphoria" of 2002 and 63 per cent said they are taking a more incremental approach by starting small and only scaling the scope after seeing tangible value.
- IT outsourcing has all the characteristics of a maturing business. More realistic expectations and incremental outsourcing initiatives incrementally characterize the industry.Despite some high-visibility setbacks and backlash from politicians and the public, corporate IT executives say outsourcing, both onshore and offshore, is here to stay. Simply put, offshore outsourcing of IT functions has reached the mainstream," the report said. Outsourcing doomsday predictors & armchair advisors to note.