Re: a thought
Having been involved in several outsourcing contracts in a previous existence: usually the winner has underpriced, either because they misunderstood the requirement or because they had a mechanism for making their profits later - EDS is notorious for that one. Often the outsourcing party has focused on price rather than results. The contracts often lock in a specification that looked ok when first written two years before the contract was awarded, but looks increasingly at odds with the organizations needs a few years into the contract, with no way to improve things. There are often perverse incentives: one outsourcer I had to price an IT service for had spent their limited capital budget, had a restricted operations budget but could add consultancy when they wanted, so I had to price the service in consultancy hours.
The best outsourcing contracts aren't based on cost savings at all. They recognize that the outsourcer has expertise or facilities that the outsourcing party needs access to. They allow flexibility during the life of the contract, have frequent senior meetings to ensure that everything is still on track, and have sensible management of the inevitable exit.
Biting the hand that feeds IT
