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Challenges in Multi-year IT Outsourcing Contracts

by: Karen Cayamanda

Wednesday, February 18, 2015 |

Modifications in IT Outsourcing Contracts

When it comes to multi-year IT outsourcing contracts, many CIOs encounter challenges in the first few months or even after a year. These usually happen when contracts are closed in a hurry, under pressure of meeting financial commitments. These can also occur when buyers are relatively new to outsourcing.

According to an article at CIO.com, here are the things that can lead to challenges in the initial stages of the outsourcing contract include:

  • choosing the service provider that offers the lowest price
  • taking your eyes off the operation
  • signing Service Level Agreements (SLAs) without proper base lining of the current operations

In many cases, it’s a struggle to maintain the balance between the needs of the business and the operational costs. Problems arise and the blame game begins. While some clients are quick to point the finger at their service provider, this can lead to more problems and even higher costs. Take note that an outsourcing relationship should be a two-way street.

Here are some of the things CIOs should look into to get the IT outsourcing contracts back on track:

  • Assign an outsourcing czar who will manage the outsourcing and shared services programs. This can drive more focus and attention to the outsourcing deal, especially during the initial stages.
  • Know what causes the issues. Instead of starting a blame game with the service provider, understand why a certain problem occurred and discuss how to solve it. As a client, take a good look at your own responsibilities and make sure that you’ve met them.
  • Restructure the outsourcing contract. After several months or a year, you might realize that the contract does not fully cover all the needs of your business. Reset all expectations by restructuring the contract, updating the scope and list of responsibilities of both parties as needed.

Entering into a multi-year IT outsourcing deal means you’re in for the long haul. Anticipate the challenges that may arise and be prepared to manage them so both parties can meet the expectations and reap the benefits of outsourcing in the end.

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