IT Outsourcing Deals Gone Bad

Partner Steve Martin offers advice in this article about the need for companies to proactively develop contingency plans for all IT outsourcing engagements to protect their IT programs in the event that an outsourcing engagement goes south. Sample excerpt: “Scores of articles and studies have highlighted the statistics around unsuccessful IT outsourcing deals – many establishing the failure rate at well above 50 percent. While the concept of IT outsourcing is not inherently flawed, the execution in many cases is – i.e., the classic distinction between ‘doing the right thing’ versus ’doing things right.’…Consequently, CIOs must thoroughly evaluate their contingency options to protect the integrity of outsourced IT initiatives should an engagement come off the tracks…As a first step, CIOs need to develop a clearly defined exit strategy prior to executing the agreement, which, needless to say, is a challenging endeavor when in the throes of attempting to build a sustainable partnership with that same provider for the future. This goes well beyond standard termination-transition language and gets into tactical provisions…”

CIO Insight