New Ways to Deliver Old Services for Less Money

by Stephen J. Andriole

Even under normal circumstances, outsourcing presents many challenges for buyers and sellers. In the current economic climate, when the value-for-money proposition of outsourcing becomes skewed toward the money side of the equation, existing outsourcing deals and prospective ones face new and different challenges. Buyers will want to reduce the costs of current contracts and obtain substantial savings in new ones. Sellers can't afford to reduce existing prices given projections of decreased revenue plus the bigger discounts required to win new work. Can both parties achieve their financial goals while maintaining a good long-term relationship?

In this issue of Cutter IT Journal, we will explore outsourcing strategies that can help organizations of all kinds weather these turbulent times. On the vendor side, you'll hear how business process outsourcing (BPO) firms have lost their customers' trust -- and how they can win it back through the use of business process management suite (BPMS) technology. You'll also learn how proactive vendors can use renegotiation as an opportunity to improve the outsourcing relationship through a collaborative effort with the customer rather than passively enduring a "dance of concessions." On the customer side, you'll discover that a renegotiated contract is not necessarily the first place to look for savings. By better managing your existing contracts in very concrete ways, you can cut costs without unwittingly encouraging "unwelcome supplier behaviors." You'll also learn how to work with your vendor in the creation of value so that innovation doesn't become the forgotten stepchild of your outsourcing deal. Whichever side of the negotiating table you occupy, you can't afford to miss this issue.