April 19, 2005

Deloitte and Touche has released the results of a new study that reveals the truth behind IT outsourcing. According to the survey of IT outsourcing client companies, 70% percent had negative experiences with outsourcing, 25% realized that they could handle functions better and cheaper internally, 44% didn't see any cost-savings from outsourcing, 57% ended up absorbing costs that they believed were included in the contracts with outsourced vendors, and 50% cited hidden costs as the biggest problem. Other statistics include: 80% had either limited or no transparency to a vendor's pricing schema, and 73% are now working to reduce outsourcing vendor dependancy. A study by Gartner last month noted that customer service outsourcing could cost as much as one-third more than doing the job internally and anger your customers at the same time.

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The InfoWorld Story

The Deloitte Report (PDF)