IT outsourcing can be an effective strategy for reducing costs and improving performance. However, research by The Hackett Group® finds that most companies only achieve a fraction of the potential benefits from their IT outsourcing initiatives compared with world-class performance. These findings underscore the importance of a well-designed and carefully executed IT outsourcing strategy.
In its study of IT outsourcing initiatives undertaken by major companies across a range of industries, The Hackett Group uncovered a substantial gap between the results achieved by top-performing companies and those experienced by the peer group. Top performers dramatically outpaced the peer group in cost reduction realized through IT outsourcing initiatives. Top-performing organizations were also markedly more successful in leveraging IT outsourcing to achieve improvements in IT operational performance (in terms of service-level criteria such as application availability, on-time project delivery and so on) and in business value delivery performance, including responsiveness to shifting business demands. The Hackett Group found two broad drivers behind these striking differences in IT outsourcing ROI between top performers and the peer group:
- Top-performing organizations conducted their IT outsourcing initiatives in conjunction with broader IT service delivery model optimizations, such as application portfolio rationalization.
- Top performers employed IT outsourcing for a broader range of processes and a larger portion of their application portfolios, thereby benefiting from economies of scope and scale.
Leverage The Hackett Group’s IT outsourcing expertise
As a leading global strategy and operations improvement consulting firm with deep experience and expertise in business process outsourcing and business process engineering, The Hackett Group can help you develop and implement a holistic IT outsourcing strategy that drives substantial improvements to the IT function’s efficiency and effectiveness. Drawing from years of hand-on experience with the world’s leading global businesses, The Hackett Group can work with you to select appropriate IT metrics for baselining current performance and measuring progress; to identify the most promising IT processes and applications for outsourcing; to evaluate, select, and negotiate with IT outsourcing providers; and to design and implement an effective governance structure including service level agreements (SLAs).
The Hackett Group’s advisory and consulting services are informed by the experience and knowledge that we have gained from years of hands-on work with leading corporations around the world, including 97% of the Dow Jones Industrials, 93% of the Fortune 100, 73% of the DAX 40 and 52% of the FTSE 100. The Hackett Group delivers fact-based advice that drives measurable improvements to operational efficiency and effectiveness.
To learn more about The Hackett Group’s services and solutions, such as executive advisory programs, our consulting support for continuous process improvement programs, our solutions for specific IT deployments like Oracle implementation and SAP implementation and more, contact us.