Discover the Hidden Costs of Outsourcing

Avoid surprises. Uncover, measure, and mitigate hidden costs of outsourcing.

Last Revised: August 16, 2011



Your Challenge

  • Business and IT leaders have come under increasing pressure to cut costs, in part due to hype surrounding the cost-cutting potential of outsourcing.
  • Outsourcing projects frequently go over budget and fail to deliver the promised cost savings.
  • IT leaders hesitate to use outsourcing when the final project costs are highly unpredictable.

Our Advice

Critical Insight

  • Info-Tech identifies seven hidden costs of outsourcing that, on average, add 25% to the overall cost of an engagement.
  • IT leaders underestimate the magnitude of each of these costs at least 20% of the time. Effective management of outsourcing requires the IT leader to correctly budget for and take steps to reduce these hidden costs.
  • Each of the costs manifests in a different way for application and infrastructure outsourcing, but apps and infra engagements mostly experience the costs with the same frequency and magnitude.
  • While large, brand name outsourcing vendors offer a host of client management services, these services do not reduce the likelihood that hidden costs will creep up on clients.

Impact and Result

  • Find the risk of each hidden cost for your outsourcing project pertinent to your outsourcing engagement characteristics  and your organization characteristics.
  • Manage your outsourcing engagement to reduce hidden costs and increase your net benefit.
  • Decrease hidden costs both for contracts that are already signed, as well as contracts that are up for review or renewal.
  • Calculate the net outsourcing cost you can expect with each available vendor.

Contributors

  • Acosta Sales & Marketing
  • FTP Inc.
  • GTS Central Europe
  • Health Intelligence
  • Jay Lambert Consulting
  • Medbuy
  • Sage Automation
  • The Royal Conservatory School
  • Thundermist Health Center
  • An additional six companies contributed to this research. Due to the sensitivity of the information, their identities will be kept confidential.

Get the Complete Storyboard

See how all the steps you need to take come together, with tools and advice to help with each task on your list.

Download Now

Get to Action

Best Practices Toolkit

  1. Avoid and mitigate the hidden costs of outsourcing

    Improve the budget performance of your outsourcing engagement.

  2. Predict the likely hidden costs of outsourcing for each vendor under consideration

    Make an informed choice whether to outsource and choose the best vendor, based on the total cost picture.

Talk to an Analyst

Each of our solution sets include information, tools and templates to help you complete a project on your own. However, if you want extra help, our silver and gold memberships include phone access to our analysts. Analyst calls are focused on helping our members use the research we produce, and our experts will guide you to successful project completion.

  • Book an Analyst Call on this topic. You can start as early as tomorrow morning. Our analysts will explain the process in your first call.
  • Get advice from a subject matter expert. Each call will focus on explaining the material and helping you to plan your project, interpret and analyze the results of each project step, and setting the direction for your next project step.

Schedule Your First Call

Help
×

Interested in Learning More?

Arrange a time for one of our account managers to contact you to explain our services.

Book Appointment

Book Appointment