Missed IT outsourcing targets

Only 24 percent of the companies achieve the goals they pursue with the outsourcing of their IT. More than a third, on the other hand, confirm target achievement of no more than 20 percent. This is the finding of a survey of around 80 IT experts recently conducted by management consultants Horváth & Partners and the University of Bayreuth.

A volatile environment forces IT managers to continuously improve the controllability and scalability of their organization. One lever is the optimal design and implementation of the sourcing landscape.

"In many companies, therefore, IT outsourcing is an integral part of the IT operating model and consequently critical to the ability of the entire organization to function"

explains Professor Nils Urbach from the University of Bayreuth.

Through IT outsourcing, 75 percent of the study participants want to increase customer satisfaction, 72 percent are pursuing the modernization of their IT and 68 percent want to reduce costs.

However, very few outsourcing arrangements are crowned with success: just 24 percent of the companies surveyed fully achieve their outsourcing-related goals.

Almost a third of companies, on the other hand, achieve only up to 20 percent of their goals. But why are some companies successful with their outsourcing projects and others not?

Cost reduction and modernization

The study shows that some IT outsourcing goals are much better achieved with the help of external service providers. This applies in particular to the goals of cost reduction and IT modernization.

If there is help from external partners with the goal of reducing costs, half of the companies are very satisfied or satisfied with the result. By contrast, of the companies that try to do it on their own, only four percent are happy with the result.

The situation is similar for IT modernization: Although a quarter of the companies working on solutions alone are satisfied with the achievement of their goals. With external support, however, satisfaction is just under 40 percent.

"Through years of experience, specialized service providers now have broad expertise and can provide valuable support"

confirms Urbach.

A closer look at cost optimization shows that companies should rather bake smaller rolls. Almost 40 percent are aiming for a cost reduction of more than ten percent through IT outsourcing. However, this is not even fully achieved by half.

If, on the other hand, companies plan to reduce costs by five to ten percent, four-fifths of them are successful. In addition, the cost reduction also has an impact on other targets:

For example, companies with lower cost reduction targets are twice as likely to achieve their modernization goal as those with cost reduction targets of more than ten percent.

The interaction between sourcing and digitization strategy was also examined.

"The development of a digitization strategy and IT sourcing do not currently show any positive dependency"

knows Michael Gschwendtner, sourcing expert at Horváth & Partners.

"However, real-world experience suggests that this will change in the future due to increasing digitization initiatives, and that an integration of the two strategies will become the decisive factor for successful IT outsourcing projects."