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Cost-reduction is often the trigger for considering outsourcing. (Listen to the Info-Tech podcast, “Hands-On Outsourcing” for an introductory overview of outsourcing). The savings achieved by others can seem very attractive. However, organizations may find that the prices quoted for outsourcing their own IT functions are higher than expected.
Your Mileage May Vary
When an IT group cannot achieve a publicized level of cost reduction, the problem may be due to the characteristics of the IT organization. The more complex that an assignment is for an outsourcer, the higher the price. By understanding the factors that boost price, the organization can:
- More realistically estimate cost-reduction opportunities.
- Identify which areas of potential outsourcing will save the most money.
- Avoid an elusive search for a vendor that will meet unreasonable cost-saving expectations.
- Improve the level of potential cost saving by addressing any factors that increase costs.