Adjusting Outsourcing Relationships to a New Economic Reality
Just a few years ago, businesses viewed outsourcing as an opportunity to gain a competitive advantage from business processes enhanced through the strategic application of information technology. Corporations invested significant resources and expected substantial returns. Vendors, for their part, envisioned healthy margins and long-term revenue streams, and committed themselves to delivering the best skills and the latest technology innovations to their clients.
Today, many businesses worry more about survival than about gaining a competitive edge. As a result, cost reduction, commodity services, and efficiency have in many cases replaced strategic investment and new initiatives as top client priorities. Outsourcers originally charged with shepherding business expansion must now retrench. As a result, many players today seek to make the best of a bad situation. How best to proceed? Specifically, how can damaged relationships be repaired? And how can existing outsourcing contracts signed during the halcyon days of the late 1990s be renegotiated and restructured to meet today's new requirements? This article draws upon over a decade of research and advisory work carried out to examine these questions and other issues related to outsourcing management.
