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Story URL: http://services.silicon.com/itoutsourcing/0,3800004871,39155067,00.htm

Outsourcing "not delivering" the benefits
Companies worried about inflexible deals

By Steve Ranger

Published: Wednesday 14 December 2005

Nearly two-thirds of UK companies believe their outsourcing contracts are "not delivering" the benefits they had hoped for.

A survey of 100 companies by law firm Denton Wilde Sapte has found nine out of 10 outsource some aspect of their business - generally IT support or call centre functions but also business process operations such as human resources or accounting.

But 61 per cent said their outsourcing is not delivering - and nearly three-quarters (72 per cent) are concerned about the flexibility of their current deal.

The head of the firm's technology, media and telecoms sector, John Worthy, said: "This should provide a wake up call to outsourcing service providers.

"In our view customer expectations could be better met by shifting the focus of outsourcing deals towards more business-orientated key performance indicators and ensuring that the deal supports the business relationship effectively."

Nearly two-thirds (62 per cent) of the firms surveyed see cost cutting as the central advantage of outsourcing, followed by gaining specialist skills (59 per cent).

But for many the greatest disadvantage of outsourcing is higher costs - generally driven by hidden costs underlying the contract - followed by the loss of internal knowledge, the survey found.

Of the companies that outsourced IT, 33 per cent also outsource their helpdesk facility, 28 per cent their call centre and 17 per cent HR.