Companies looking to outsource applications, development and maintenance (ADM) have not fully considered all the costs.
Thats the conclusion of recent research from Meta Group which surveyed 150 senior IT executives across Europe on the implications of outsourcing. The survey, which was commissioned by Compuware, found that 80 percent of companies had suffered problems and that about 30 percent had made no plans for the cost savings that they could make - even though more than half of the organisations surveyed said cost had been the key driver.
According to Paul ONeill, VP of Meta Group Europe, organisations have a habit of making decisions without considering all the consequences. He said that they looked to move offshore because of cost savings but didnt have a clue as to what level of savings they could actually expect. "There just seem to be some vague idea of saving money," he said.
The research showed that 80 percent of organisations have suffered problems ranging from time and cost overruns, to non-adherence to specifications and requirements, when outsourcing ADM projects.
ONeill identified several key areas in particular where organisations failed to plan properly. "Companies have to be careful about giving away information about their business processes to a third party." He pointed that it wasnt just a question of signing an outsourcing deal on its own and organisations had a lot of work to do non-disclosure agreements.
He thought that too many companies believed the hype and thought they could achieve 40 percent cost savings when the real figure might be closer to 15 percent.
At least theres a level of consistency across Europe. Meta Group found no differences between any of the countries surveyed.