Compass Management Consulting has earned itself a great deal of PR in the last few weeks (in Computing and the Financial Times) with a story that claimed that Outsourcing deals are hitting the rocks because of many businesses' short term focus on cost reduction. They argue that 65 per cent of all outsourcing contracts worth over £20m unravel before running their full term.
Some say that all coverage is good coverage, but when the story is so clearly not based on reality, it makes the company look rather foolish. Whatever one thinks of outsourcing, it is a method by which companies can cut costs. Price reduction over the last few years has been apparent, but in any outsourcing deal price reduction should be factored in from the start. Both the outsourcers and the internal technology team would be similarly affected by reductions in technology and software costs and therefore in-sourcing is not the cost saving opportunity that they would like to tell you.
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