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Outsourcing sees uptick in contract renegotiations

by: Carlo Abadilla

Thursday, February 25, 2010 |

A survey by Gartner Inc. indicates that out of 1,073 outsourcing organizations surveyed worldwide, almost 50% of them experienced a sharp increase in contract renegotiations. The survey further revealed that the majority of the renegotiations involved bids to cut costs due to the recession. Gartner analyst, Allie Young, warned that these renegotiations only leave room for mistakes on both ends of an outsourcing deal.

Young says that the major complaints he hears from CIOs is the lack of innovation from outsourcing deals. My question is, What did you think you were going to get? There is no provision in the contract for innovation Young commented in response.

Young further explained that successful outsourcing contracts depend on documentation. Citing Apple's $100 million investment in an outsourcing provider in hopes of acquiring innovative services, Young argued that the documentation of innovation is very difficult and rare in the industry. "About the best we have been able to do is dedicate a pool of resources from the supplier side, whose job is to sit in the client's business and look for new opportunities to bring new projects to bear," stated Young.



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