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What Buyers Get from IT Outsourcing Deals

by: Sarah Joson

Monday, March 4, 2013 | Outsourcing News |

An HfS Research survey involving 450 IT service buyers and providers was recently discussed at CIO.com. Results suggested that IT buyers want innovation, success evaluation, and analytics capabilities from their service providers, but arenít getting them. Less than half of them noted that they provide analytics, industry acumen/relationship management, and training internally. Also, less than one third of IT outsourcing customers said they experienced formal training for these factors.

The survey found that while outsourcing buyers perform well in negotiating contracts and choosing the right service provider, they fall short on the processes that come after it such as driving innovation, defining business outcomes, and improving analytics.

According to Phil Fersht, CEO at HfS Research, problems in these types of skills will be seen this 2013, even if 43 percent of outsourcing customers still identify cost reduction as the most important factor during outsourcing decisions.

For the coming months, survey participants said what they would want to change in outsourcing are management strategies, and improving the approach and perception that outsourcing is not only about cost reduction but value creation as well.

Outsourcing buyers may get what they paid for, which is reduced expenses at a contract agreed upon, but they are not satisfied as they want skills and talent that can drive innovation, analytical thinking, and better business outcomes.

Fersht said if IT outsourcing customers and service providers want to achieve those goals, they should develop their talent pool. Not only will they provide relevant contribution to the clientís cost saving practices, they will also be able to grow with the operation and help provide direction and focus.

Meanwhile, the first quarterly market index report, also released by HfS Research, states that with a projection of 3.5 percent growth last year, by 2017, the industry would have sustained a compounded annual growth rate of 4.7 percent.

Furthermore, Fersht notes that for this year, outsourcing buyers and providers will be more mature in organizational approaches.

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