Cost-cutting 'should be avoided' in outsourci

28/03/2008

Firms that try to cut costs as part of outsourcing deals may well be risking failure, a new report has said.

The survey, carried out by Compass Management Consulting, found that in some cases discounts of 23 per cent are being demanded by those striking deals with outsourcing companies.

Such negotiations are taking place because of the current economic situation in Britain, the firm stated, with cuts to charges being requested by chief information officers.

Leader of the global sourcing service line at Compass Geraldine Fox warned that in some instances the deals are not relevant to the goals of the outsourcing projects.

"Although the broader economic signals are mixed and senior managers are largely optimistic, we are seeing aggressive, high-level targets plucked from the air in contract negotiations," she commented.

Furthermore, outsourcing providers are being treated by a number of organisations as "a discretionary spend", she added, something that could have a detrimental impact upon the relationship between the two parties.

In an example of businesses getting it right, a deal was recently signed between Towergate, Hornbill and Maxima, with the latter set to operate central service desk.

Related News Stories