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Balancing the Risk and Reward of Outsourcing Contracts

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There are many paths that can lead an organization to determine that outsourcing is the right strategy for improving the long-term viability of its IT operations.

For some, it is primarily a cost decision. For others, cost is an important factor, but there are other pressing needs, such as dramatically improving day-to-day delivery or transforming the environment in response to changing business priorities. Depending on the organization’s unique circumstances, their IT sourcing strategy may encompass one or more delivery towers, include one or multiple providers, and require a short or a long transition period. Culturally, you may need to also consider how much control to retain.

The best outsourcing agreement for your organization is not necessarily the one with the lowest price. Your primary goal when negotiating and structuring an outsourcing contract is to develop an agreement that achieves your business objectives not just on day one but throughout the entire term. To do this well, you must understand the overall construct of a good outsourcing contract and make certain you balance the overall risks and rewards in order to receive the services you need at the levels you require and within your price constraints. Pushing hard to maximize the returns in one area can negatively impact other areas, finding the “right” mix is the art of successful outsourcing. As you think through the various sourcing scenarios, use the following guidelines to help clarify your requirements and establish the right point on the continuum for each. By looking at your options this way, you will be able to better align your outsourcing agreement with your strategy and requirements. Download full white paper below.

Last modified on Wednesday, 12 September 2012 09:18

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