IT outsourcing customers get what they pay for, not what they want

By Stephanie Overby, CIO |  IT Management, outsourcing

IT outsourcing customers say they want more innovation, analytics capabilities, and attention to business outcomes from their IT service providers, but they may not be getting it.

[ Related: 9 IT Outsourcing Trends to Watch in 2013 ]

Less than half of IT services buyers say that they have formal training for their staff in analytics, industry acumen or relationship management. Even fewer IT outsourcing customers--less than a third--indicate that they had formal training in the areas of analytics, industry acumen or transition management.

And, according to survey of more than 450 IT services buyers and providers conducted by outsourcing analyst firm HfS Research, there's plenty of blame to go around.

When asked to rate their own talent, outsourcing buyers consider themselves strong in tactical areas such as contract negotiation and service provider selection but weaker in the more strategic fields of improving analytics, driving innovation, and defining business outcomes beyond cost savings.

These talent gaps in outsourcing partnerships will come to the forefront in the coming year, says HfS Research CEO Phil Fersht. Outsourcing customers cite cost reduction as the most important driver for outsourcing decisions--43% of respondents label it "mission critical."

[ Related: Is IT Outsourcing a Dying Concept? ]

Looking out at the year ahead, however, respondents say the most important issues related to outsourcing strategy would be change management, altering the leadership mindset from cost reduction to value creation, and accomplishing innovation with operational processes.

"Outsourcing buyers are getting what they paid for: cost-reduction and efficient delivery," Fersht says. "[But] outsourcing buyers are not getting what they now want: innovation, analytical capability and skilled talent to define business outcomes."

In part, that's because the focus at the start of most outsourcing relationships is on the tactical. "Buyers want execution skills initially, and providers want to ensure they meet their metrics and performance goals," says Fersht. "In addition, it's expensive to recruit more experienced staff with the necessary strategic acumen."

[ Related: Decline in IT Outsourcing Market Challenges Service Providers ]

Originally published on CIO |  Click here to read the original story.
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