By the time we are seeing all these issues surfacing, both we and the vendor are in reaction mode, putting out one fire after another with little time to fix the underlying causes.
Overall this means the IT budget may go down for awhile, but work quality and volume have slowed down significantly. Additionally, the business users are absorbing unexpected costs due to delays in knowledgeable technical support and timely issue resolution. There are potential lost business opportunities because critical application changes are being delayed… or are not working when implemented.
What has really happened? In this example, IT is not achieving the $ Cost savings promised by the vendor AND the business is also being hit with additional $ Cost because of poor support service – the double cost whammy is kicking into high gear!
In order to know the “true outsourcing savings” you must know the, “true costs” of IT outsourcing, the following is a summary of these additional $ Cost elements:
- Additional IT cost associated with managing the vendor and possibly additional infrastructure for remote locations.
- New processes, artifacts and communication requirements necessary in an outsourced and possibly remote IT support environment.
- Additional cost to the business if support services are slow and/or inadequate.
- Additional cost to the business if critical projects are delayed because of the vendor’s inability to deliver on-time.
- If an off-shore vendor is involved there may be time zone, cultural and language differences. Additional cost of solution development because of misunderstood requirements, which create software defects, which in turn cause costly re-work.