When asked how the cost of outsourcing transactions can be reduced, Dennis McGuire, president of Technology Partners International, says that the most problematic area occurs before the contract is signed. The largest source of costs, he explains, lies within the process of negotiating the contract…
Cost pressures continue to intensify as the Internet sets off a seismic shift in the global marketplace. Reducing the costs of an outsourcing transaction becomes an increasingly important component of the contract process. How can clients save money?
Companies like big vendors because they have many resources at their disposal and through years of experience have gained a great deal of knowledge about the network infrastructure business. But as Jeff Winston, vice president of information technology at Allergan, Inc., looked at five or six communication vendors in early 1996, there wasn’t any objective data that pointed him away from Infonet
International outsourcing involves complexity and risks not found in typical domestic outsourcing. These risks are cultural, political, financial, technological, managerial and legal. Ultimately, these multiple international risks show up in the process of drafting, negotiating and enforcing the contract. Freedom of contract varies according to the governing laws and attacking the legal issues requires initiatives from the beginning.
The objective of transition management is three-fold. One, to ensure that there is no disruption to your business. Two, to hand off responsibilities at a specific time. Three, to make sure the transition is smooth and orderly.
Flexibility in legal outsourcing contracts bears striking similarities to a team of professional athletes under the tutelage of a watchful coach.
For those who have negotiated multiple outsourcing deals over the years, there is no question that there are indeed common problems and challenges faced in almost all outsourcing deals.
There’s a high rate of dissatisfaction among customers with IT outsourcing agreements, according to recent surveys by Deloitte & Touche, Coopers & Lybrand, and others. However, that dissatisfaction appears to signal the industry’s growing pains rather than its demise. The outsourcing market has continued to grow, enjoying a 15 percent to 20 percent annual growth rate for several years.
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