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Outsourcing Pitfalls (continued)

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Pitfall Number 1: We can easily manage this relationship
Once the outsourcing contract is signed and the responsibility and risk are shifted to the provider, we have very little to do. A person can manage this relationship, meet with the provider occasionally, and review performance, cost and other information as required. One of the benefits of outsourcing is that we no longer need be involved in this function. This is the biggest reason why first-time outsourcers go wrong. Outsourcing does eliminate work. But it also creates work. And, just as importantly, the management of an outsourcing relationship requires different skills than the management of the individuals that had been performing the function. The people in your IT department may not have the skill sets to do the job. A “retained” organization must be created to focus on relationship management, change control, and contract management in connection with the outsourcing. This may actually add personnel to the deal, and experts have estimated that six to 10 per cent of the cost of an outsourcing deal should be allocated for this purpose. If you are not going to pay attention to managing the deal and constantly assuring it makes sense for your company, you will get burned. And should your most experienced and knowledgeable people stay with your company or should they move to the outsourcer? Which of you has more need to tap that intimate knowledge of your business developed over many years? These are the top five, and as with any list of this type, there are plenty more where they came from. If you or your company is new to outsourcing, contact those advisers who can lead you through the process, and join and participate in industry groups dedicated to advancing the understanding of outsourcing, such as the International Association of Outsourcing Professionals, the Outsourcing Institute and the Sourcing Interests Group. Instead of putting yourself through the wringer, learn from your peers who have themselves suffered such indignities, and improve your chances of a successful first-time IT outsourcing deal.

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