IT Outsourcing a Gamble

IT Outsourcing a Gamble

Information technology outsourcing deals are often rocky, with users complaining more than half the time about service levels, unexpected costs and dissatisfaction with vendor personnel, according to a survey of US-Fortune 1000 companies by Gordon & Glickson PC, a Chicago-based law firm that focuses on high technology.

Of the 85 companies with sales of more than US$2.5 billion that responded to the survey, 54 percent reported that their outsourcing relationships had gone "severely awry. "The problems ranged from employees who feel that their jobs are at risk to snafus when determining service levels," said Barry D. Weiss, a general partner at the firm.

"Companies that are good at running IT departments as a stand-alone business may not have problems with an outsourcer and "probably don't need to outsource in the first place," Weiss said. "[But] a lot of times, an outsourcer will come in [to a situation] where you've got a certain amount of disarray or not as much clarity about what is being delivered."

"Anytime there is a change of any significance, it's going to cause problems," said Paul Johnston, an analyst at International Data Corp.

Despite the potential problems, a majority of companies believe outsourcers can deliver improved services, Johnston said. For those companies that can't keep up with the IT skills shortage and technology changes, "outsourcing will be the right alternative," he added.

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