Even as CIOs enter their third generation of IT services deals, misconceptions persist about the practice of IT outsourcing. Worse, new illusions have begun to emerge as outsourcing approaches have evolved. Achieving desired outcomes when working with third-party providers depends on clear-eyed understanding of what’s possible and what’s not, what responsibilities remain with the buyer and what new capabilities are required, what’s changed about outsourcing models and what remains the same.
talked to IT outsourcing experts who work with IT buyers and vendors to help bust some of the most common myths around outsourcing today — and to aid IT leaders in setting up their outsourcing engagements for success.
Myth: The old ways still rule
Third-generation outsourcers may think they know everything there is to know about structuring engagements for success, but the reality is that the fundamentals of value creation from outsourcing have changed significantly. Consumption-based pricing is replacing fixed-price models. Contracts designed for efficiency and cost reduction have given way to deals aligned to business outcomes and growth.
“The fundamental mindset needed to succeed is very different, and a contract written for efficiency does not align with a contract that needs to drive growth,” says Jimit Arora, partner in Everest Group’s IT services research practice.