10 early warning signs of IT outsourcing disaster

The causes of IT outsourcing failure are numerous, but there are some common indicators of trouble that IT leaders can monitor and address before an outsourcing relationship goes off the rails.

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There are a number of reasons why IT outsourcing engagements fail — from unrealistic expectations and lack of governance to misaligned interests and poor communication. Sometimes the problems lie with the IT service provider; other times, the customer is at fault. In most cases, the two parties each share some of the blame.

However, there are some common warning signs of impending outsourcing disaster that IT leaders should look out for. In many cases, a troubled outsourcing relationship can be turned around, and identifying these leading indicators of outsourcing strife can enable CIOs — even in the worst cases — to limit the overall damage.

High turnover

Increasing attrition of outsourcing resources is never a good sign. “It could mean management is doing something wrong, people don’t like working for the particular client, or the client isn’t doing its part,” says Marc Tanowitz, managing director for business transformation at outsourcing advisory firm Pace Harmon. It could also mean that the financial framework of the deal, using blended rate structures, has created an unintended consequence of driving work to the lowest cost resources at the service provider.

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