Current infrastructure outsourcing contracts due for renewal should be renegotiated. Renegotiation of existing contracts will deliver additional cost-savings and improve service levels. IT leaders should prepare before existing contract terms expire and avoid auto-renewal mechanisms.
The Current Outsourcing Climate
The principal terms within outsourcing agreements reflect past economic realities for both outsourcer and the client. But the outsourcing conditions prevalent when current agreements were entered into are no longer valid.
The average contract length for the most commonly outsourced functions ranges between four and six years. Thus, outsourcing agreements signed between 2000 and 2002 are now reaching a renewal period.
Throughout the agreement period, costs have decreased for both outsourcers and enterprises. Additionally, processes and procedures ideally have been streamlined and automated achieving high levels of efficiency. As a result, enterprises might expect the renewal process to yield additional savings from vendors.
However, Info-Tech Research Group finds that outsourcing vendors maintain...
