Management and strategic issues for IT leaders, by former Computing Business editor Mark Samuels Management and strategic issues for IT leaders, by former Computing Business editor Mark Samuels Management and strategic issues for IT leaders, by former Computing Business editor Mark Samuels

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Wednesday, 30 April 2008

The future of outsourcing is outcome-based, says TPI

Outsourcing I'm currently editing an article by Duncan Aitchison, managing director of outsourcing advisory firm TPI. With a cup of Incisive Media coffee at my side, I am a panning the copy - so to speak - for golden nuggets of best practice advice.

The general theme of the piece is change - the outsourcing market has changed, and will continue to change further. Long gone are single supplier deals, where one user trusted its systems with a single service provider.

As has been pointed out regularly during the last six-or-so months, more and more companies are entering into multisourcing deals, where firms can benefit from the expertise of niche providers IT in specific business areas.

And times will get tougher for service providers if they are not alert to further change. In the future - and largely as a result of the current credit crunch, Aitchison expects IT managers to base more outsourcing contracts on the ability of service provider to meet pre-determined targets:

"As outsourcing matures, IT managers are looking for value and a more defined business impact from their outsourcing relationships. Businesses are seeking more than transactional cost savings and incremental service improvements, much of which can be more simply achieved through offshoring," he says.

"We, therefore, expect to see a shift away from input-based contracting to productivity driven deals based on outcome-based pricing. As contracts mature and service providers demonstrate their capabilities, more sophisticated outcome-based pricing may be tied to the vendor’s ability to provide productivity improvements."

Tough times call for tough talking from IT managers, I guess.

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[...] Outsourcing as the trend of the times! It is considered as a tool that can be used to make the life easier and run the business profitably. [...]

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