Eighty-five percent of all outsourcing contracts signed between
2001 and the end of 2004 will be renegotiated within three years of
signing because the original contracts did not serve long-term
objectives, according to Gartner Inc.
Most companies sign with an outsourcing provider to lower expenses. However, enterprises must have clauses to renegotiate these contracts as the enterprise's objectives evolve, said the market analysts.
"The outsourcing deal must be flexible so that as business goals change, the deal will also change," said Linda Cohen, managing vice president for Gartner.
Cohen continued:
"Successful outsourcing depends on a perfect balance of trust and control between both parties. Long-term outsourcing deals are usually constructed to rely on control rather than trust. However, organisational agility and the ability to create value requires flexible thinking and creativity that goes beyond process excellence."
For an Indian perspective on the protectionism debate that currently surrounds the issue of offshore outsourcing, read N Changra Mohan's column in India's Financial Express
