Outsourcing Definition and Solutions

• What is outsourcing?
• Why outsource?
• ITO, BPO, KPO: What’s the difference?
• What about cloud computing? Is that outsourcing?
• Why is outsourcing so hard?
• How is outsourcing priced?
• What about bundling?
• What is an SLA?
• How long should an outsourcing contract last?
• Should I outsource everything to one vendor? Or should I use a best-of-breed approach?
• How do I decide what outsourcing vendor or vendors to work with?
• Should I get outside help with this decision?
• What's the best location to outsource IT?
• Do you have any tips for outsourcing negotiations?
• What is benchmarking, and when should I do it?
• What are the "hidden costs" of outsourcing?
• What do I need to know about outsourcing's transition period?
• I have an existing contract with an outsourcer. When new work arises, should I give it to my existing provider?
• How important is ongoing relationship management to outsourcing success?
• What if outsourcing doesn’t work out? Can I just bring the work back in-house?
• Can I sue my outsourcer?
• Should I fire my outsourcing vendor?

What if outsourcing doesn’t work out? Can I just bring the work back in-house?

Backsourcing (bringing an outsourced service back in-house) when an outsourcing arrangement is not working—either because there was no good business case for it in the first place or because the business environment changed—is always an option. However, it is not easy to extricate yourself from an outsourcing relationship, and you may no longer have the necessary skills to repatriate the work. (See Nine Questions to Consider Before Insourcing Outsourced IT for more information.) For that reason many clients dissatisfied with their outsourcing arrangements renegotiate and reorganize their contracts and relationships, rather than attempt to return to the pre-outsourced state.

That said, sometimes backsourcing is the best option, and in those cases it must be handled with care. For more on the good, the bad and the ugly of bringing IT back in-house after an outsourcing deal, see Backsourcing Pain and Bringing IT Back Home.

Can I sue my outsourcer?

An outsourcing relationship is a contract. If you feel your provider is in breach of that contract, you can take them to court. The question is, should you?

Historically, outsourcing lawsuits were rare. Vendors want to avoid the bad publicity of a trial, and customers just want the problem to go away. Consequently, disputes are often resolved between parties or—at worst—arbitrated outside of the courts, which results in confidential settlements.

That may be starting to change. Increasingly, IT services customersparticularly in the public sector are taking their grievances public by suing their outsourcers. (And in many cases, then being countersued by the vendor.) Recent rulings in favor of outsourcing customers could encourage more IT buyers to seek damages for business impact caused by poor IT delivery performance.

As more service providers end up with a least one public court judgment on their records, remaining litigation-free is no longer a competitive advantage, which makes them more' willing to take their chances before a judge or jury.

But while a court judgment can take the sting out of a bad IT services deal, you can't litigate yourself to a better outsourcing relationship.

Should I fire my outsourcing vendor?

Sometimes you have to fire an underperforming IT outsourcing provider. But terminate with care. Ending an outsourcing relationship prematurely is complicated, costly and painful. It results in additional fees, plus the cost of transitioning to a new provider or bringing the work in house.

In many cases, both provider and customer are to blame when an IT services deal fails to deliver, so it's important to examine the root cause of problems before making a decision about the fate of an existing relationship.