The report said that although companies pour lots of energy into signing outsourcing deals, they are forgetting to factor in the internal costs of hiring or training staff to maintain and build on that relationship.
Leslie Willcocks, professor of technology, work and globalization at the London School of Economics, who led the research, said: This costs about 4% to 8% of contract. But as the one thing people look at when they outsource is to reduce costs, they find it hard to think about the fact that it may cost them to get the right people. The natural tendency is to reduce expenditure in the in-house function.
The report highlighted four key areas that companies fail to address: a lack of internal IT leadership; not understanding the business requirements; inadequate relationship building; and a failure to provide the right internal resources and skills.
Willcocks said that tackling these issues upfront and throughout the lifetime of an outsourcing contract can affect cost, service, and quality by 20% to 40%.
