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A Look at the Diminishing Trust in IT Outsourcing

by: Sarah Joson

Thursday, June 21, 2012 | Outsourcing News |

Trust Issues in Outsourcing Operations?

Tony Bradley’s article at PCWorld.com highlights the shift of the buyer’s behaviour in procuring IT business process outsourcing (BPO) services.  

A lot of business owners perceive outsourcing as a simple solution to cut costs, but a survey done by Lieberman Software shows different results. During the recent InfoSecurity Europe 2012 summit, 71 percent of IT experts said they outsource majority of their IT operations, 42 percent said their outsourced operations cost a bit higher than their actual budget, and 16 percent ended up paying significantly more than what they were expecting.

The figures ultimately showed that a lot of the participants who outsource IT operations paid more than what they anticipated, contrary to popular belief that it will in fact lead to significant cost savings. Their experience has now somewhat created a negative image when it comes to IT outsourcing.

The study also indicated that quality and trust are crucial factors for buyers. One third of the respondents saw that the quality of work done by the outsourced team is inferior to what in-house employees deliver.

Moreover, 64 percent said their outsourcing providers are deliberately inflating the actual costs by adding unnecessary work.  This bothered Lieberman Software President and CEO Philip Lieberman more than the results’ collective indication that it may not be ideal to outsource.  

Granting that there’s a developing worry over IT outsourcing, the process is needed by several companies, especially small and medium-sized businesses (SMBs) as it is the only direct solution to budget woes, reinforce manpower, funnel internal processes and in some cases, it is the only solution for specific processes because the in-house team lacks the skill to finish a certain project.  

In line with that, outsourcing can still outdo the entire negative connotation it has reaped if handled properly.  Buyers should be well-informed and aware of the challenges and exert more effort in building relationships with trustworthy IT outsourcing providers as the study has clearly proven that cost is no longer the main factor for every operation.

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