- Major Studies
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The maturation of outsourcing and the improving economy continue to provide good opportunities to leverage outside service providers for organizations of all sizes.
But up-front planning is needed to ensure that the outsourcing experience is positive. In this report we present the four essential steps that organizations can take to avoid major pitfalls and reap the benefits of outsourcing.
Figure 1 from our study, Four Essential Steps Toward Outsourcing IT Functions, shows that among small businesses that engage in IT outsourcing, 6.7% of the total IT budget is typically spent on outside service providers, compared to 6.3% among large organizations. Midsize organizations spend 4.7% of their total IT budget on outsourcing at the median.
While cost savings are often a driver for outsourcing, there are other strategic advantages to consider when looking at outsourcing. The need to preserve capital, reduce costs, improve operational flexibility, increase service levels, reduce management overhead, or rapidly deploy new capabilities can sometimes be even more important than cost. These other advantages can be especially attractive to smaller companies that have more difficulty sourcing best-in-class capabilities in all facets of the enterprise.
See the full report for an in-depth discussion of the four steps: 1) define the opportunity; 2) select providers; 3) develop details of the deal, and 4) negotiate terms and conditions.