UK businesses which cut costs on outsourcing deals may be putting their contracts at risk of failure.
A new survey, from Compass Management Consulting, has shown that British companies are demanding 15 to 23 per cent discounts on contracts with outsourcing firms, reports Computer World UK.
But Compass has warned chief information officers (CIOs) not to put too much of a squeeze on outsourcing companies as it may cause "contract failure".
Geraldine Fox, leader of the global sourcing service line at Compass, said: "We are seeing aggressive, high level targets plucked from the air in contract negotiations which bear little relation to what the business needs."
Another main concern is that companies are not exercising due diligence when rushing to seal the deal and signing a long-term contracts with only short-term budget concerns in mind.
Due to these factors the relationship between CIOs and the outsourcing provider is suffering, which affects the quality of service.
India has been shown to be dominant in the outsourcing market, with it being used by every UK business offshoring some IT processes, according to research from EquaTerra.
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