9 ways to cut outsourcing consulting costs

By Stephanie Overby , CIO |  IT Management, Consulting, outsourcing

4. Nix the Presentations Beware the PowerPoint black hole. "Many organizations require layer upon layer of executive involvement [in an outsourcing deal], each requiring new presentations," says Strichman of Sanda Partners. "It is all too easy for the consultant to get drawn into this, which eats up enormous time."

5. Hire Your Own IT leaders embarking on big outsourcing deals or engagements with multiple providers should consider hiring their own IT services experts full-time. "If you can find someone who has lived and breathed it, it can be expensive in the short term," says Scott Holland, principal in the IT transformation group at the Hackett Group. "But longer term, it will pay for itself in no time." Just make sure they have the opportunity to stay on top of trends in the marketplace, advises Padron.

6. Pick and Choose Outsourcing consultants may tell you they can provide value only if they remain engaged for the entire process. If you want to keep a lid on costs, don't buy it, says Strichman of Sanda Partners. Tell them where you need help, what your budget is, "and they will do it," he says.

7. DIY First, Consult Later "An interesting approach that hasn't been widely accepted by the market is to have the client negotiate their best deal with the sourcing provider, and then have the consultants come in and adjust the pricing and terms and uncover the pitfalls," says Ruckman of Sanda Partners. It will bring down consulting costs, but may extend the time to complete the deal.

8. Consider a Fixed Price Arrangement Some consultancies—and even a few law firms—offer outsourcing advisory services at a fixed price. Unexpected issues will come up, and you'll have to pay more when they do. "But in the end, you will spend far less than the hourly rate game," says Strichman of Sanda Partners.

9. Choose Wisely "Take the time to look at the value a consultant can bring and then to carefully choose the right consultant for the job," says Edward J. Hansen, partner at law firm Baker & McKenzie. "The right consultant may not be the least expensive consultant—or the most expensive for that matter—but has the potential to create value in ways that may not be fully understood without the years of experience that person brings to the table. If a consultant is providing good value during the selection process, the fees will be repaid exponentially in areas like transition cost avoidance and value realization."


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