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Selective Outsourcing - Potential for Reward and Potential for Risk, Says IDC

16 March, 2005 10:58

NORTH SYDNEY, 16th March, 2005 –IDC's recent research into selective outsourcing has found that organisations cite a lack of flexibility and transparency in pricing, along with declining service levels as the biggest disadvantages of Whole-of-IT Outsourcing.
In the recently released report titled "The Outsourcing Dilemma - A Look at Selective Outsourcing in Australia," IDC has researched the sentiments of organisations that have changed their sourcing strategies and moved away from Whole-of-IT Outsourcing towards a Selective Outsourcing model. Case studies have been presented in the report, which highlight the key drivers behind the decision.
"Selective Outsourcing is being perceived as the new vehicle of change which would help organisations drive their costs down and achieve better efficiencies. The large-scale, single-vendor arrangements have been characterised by unrealised cost savings, ill-defined contractual terms, ineffective service levels, and vendor inflexibility in response to changing business requirements.
"In response to the problems, the 'selective outsourcing' model has emerged as an attractive alternative to the single-vendor approach. This sourcing strategy will however bring new challenges in terms of vendor management and governance, which would become more complex due to multiple vendors involved," said Aprajita Sharma, IDC Australia's Senior Outsourcing and BPO Analyst.
"It may also lead to duplicated efforts, and problems might go unresolved if they don't clearly fall within the scope of responsibility of any individual vendor. Thus defining a robust governance framework with a clear responsibility matrix will be extremely critical to the success of these outsourcing relationships," added Ms Sharma.
IDC's report also presents suggestions to vendors on what would be required in order to gain a competitive edge and a winning formula for such contracts.
Key highlights from the report are:
* This new outsourcing trend will make the competitive landscape more crowded, opening doors for small and mid-sized service providers who have better expertise in their own niche areas.
* Such contracts can be looked upon as sources of lucrative opportunities by service providers who offer consultancy services in defining sourcing strategies. They can add value to their offerings by also provisioning post-contract vendor management services.
To purchase this study, please call the IDC sales team on (61 2) 9925-2226 or email Gary Clarke on gclarke@idc.com.
For press enquiries please contact:
Aprajita Sharma
Market Analyst, Outsourcing and BPO
Email: asharma@idc.com
Phone: 61 2 9925 2257
Click here to view the press release online:
http://www.idc.com.au/press/detail.asp?releaseid=149
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