A beneficial outsourcing relationship can lead to successful IT projects and development.  The IT outsourcing industry has grown significantly over the years, but according to research, a large percentage of outsourcing agreements are not meeting the expectations of either the outsourcer or provider.

The International Association of Outsourcing Professionals (IAOP) completed a study that analyzed the state of outsourcing relationships for more than a decade.  Researchers discovered that some of the factors that impact the success or failure of an outsourcing relationship remain the same.  A study that was conducted in 1997 identified some of the same factors in the success of an outsourcing relationship as IAOP’s most recent report.

According to the 1997 study by the Outsourcing Research Council, some of the factors that negatively influenced outsourcing relationships included the following:

• Setting unrealistic expectations and over-promising during the sales process.
• Structure of the relationship was inappropriate, which led to a discrepancy of interests during the engagement.
• Transitional details were not given adequate attention.
• Both parties were inflexible when it came to business needs and changes to operational requirements.
• Clash of culture between the two parties.
• A high turnover rate.
• Customers did not work through their business objectives.

Even though these studies identified potential problems, IAOP did identify some ways to assure the success of the alliance.  The IAOP study analyzed the key elements involved in creating a successful outsourcing relationship between the outsourcer and provider.  These findings were also consistent with the 1997 study and are summarized below:

• The expectations set by the outsourcer will lead to improved market standing through acquisition of new skills and competitive positioning.
• The provider will use its techniques, competencies and processes to improve the efficiency of the operation and cost basis.
• Both parties must understand that there has to be a strong relationship, including communication in order to create a successful alliance.

The IAOP researchers came to the conclusion that the factors necessary to create a successful outsourcing relationship have remained consistent and will continue to do so in the future.

If your company is considering IT outsourcing, contact the global sourcing strategists at A&E Consulting at 661-200-3612.  We can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.

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