Outsourcing model in peril?

Outsourcing model in peril?

Clients doubt results of outsourcing deals.

A new survey reveals that clients are not happy with their IT outsourcing deals, with some respondents saying their contracts have become more expensive than originally planned.

A press statement by Lieberman Software expressed "shock", and surprising and "astonishing" revelations, including a possible "breaking point" between outsourcing companies and their clients.

In a media announcement Lieberman said an "astonishing 77 per cent of IT professionals who work in organisations that use outsourcing say their outsourcers have '...made up...' work in order to earn extra money."

Another result of the study which came as a "shock" was that 62 per cent of respondents said that their outsourcing contracts came out as more expensive than they had anticipated. In contrast, only 11 per cent of respondents said their outsourcing contracts amounted to less than what they originally expected. Still, a "surprising" result was that 27 per cent of survey participants said their projects had cost "significantly more than planned".

The survey results were first done at the recent Infosecurity Europe 2011 event in London and then again at RSA Conference 2011 in San Francisco. The participants included nearly 500 IT professionals from Fortune 100 companies with outsourcing deals.

Forty-three per cent of respondents said they outsource "a significant portion" of their IT. Some 55 per cent of larger organisations, or those with more than 1,000 employees, said they outsource a significant portion of their IT compared to only 30 per cent of organisations with less than 1,000 employees.

Outsourcing model

Philip Lieberman, president and CEO of Lieberman Software, said the results are not surprising to those who believe in the outsourcing model.

"Fundamentally, IT outsourcing has been an exercise in reducing expenses and passing along HR issues to others. The unfortunate by-product of this quest for lower costs and fewer headaches is a situation where corporate collective knowledge, as well as loyalty and intellectual talent, has been lost," said Lieberman, whose company provides privileged identity management and security management solutions.

Lieberman urged companies to review the criteria for determining results while warning about the security risks involved in outsourcing IT operations.

"If organisations are going to outsource IT they must measure their outsourcers' performance across the appropriate set of criteria - not only cost, but resiliency, transparency and data security," Lieberman said.

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