Lesson from Outsourcing Trenches: Avoid Tunnel Vision

Ann All

Outsourcing strategies that emphasize process improvement and other business benefits are generally more successful than those focused solely on saving money.


If there is a recurring theme to this blog, that just might be it.


I wrote about it here, passing along advice from organizations with real-world outsourcing successes. And here, sharing wisdom from smart analysts at Deloitte and Compass Management Consultancy.


This ZDNet Australia piece, in which several executives from banks Down Under share their outsourcing experiences, has an especially interesting take on the cost issue. Patrick Eltridge, who until July was Westpac's consumer CIO, says that too much upfront emphasis on cost can destroy the "competitive tension" necessary for a healthy outsourcing relationship.


Many service providers respond to price pressure by saying they can offer lower costs if a customer commits to a longer and/or more exclusive deal, says Eltridge. While it may be tempting to make this kind of a deal, most experts agree that shorter, smaller contracts offer a better way of mitigating outsourcing risks. There are exceptions, of course, several of which are outlined here.

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