Half of outsourcing deals will fail in the next year, says TPI

“Due to poor management and lack of control [from the outsourcing company], 50% of all IT outsourcing deals are likely to fail in the next 12 months, potentially costing European businesses some £500 million.” So says IT business process outsourcing specialist firm, TPI. TPI says the top five reasons for failure are: unclear outsourcing objectives and expectations not agreed; the deal is based on an executive handshake; procurement handled the transaction; nobody involved in the deal actually manages the deal; insufficient resources were allocated to manage the contract. “The benefits of outsourcing are clearly understood by the European business community,” says Duncan Aitchison, managing director of TPI, “But the market has been slower to appreciate the complexity and potential negatives of these deals if they are not negotiated, implemented and managed properly. “Cost savings and efficiencies can be illusory if a deal has not been well structured or managed. We need to look at outsourcing deals as akin to a merger or acquisition and use the appropriate advisors – the risk of failure for larger IT and business process outsourcing deals is simply too high.” TPI’s European customers include Pfizer, General Motors Europe, AstraZeneca and Kvaerner.