Strong relationships key to successful outsourcing

22 June 2007

Industry survey reveals the hallmarks of outsourcing success.

Not maintaining strong relationships throughout the lifetime of an outsourcing project is a key reason why outsourcings fail according to a joint survey carried out by international law firm Bird & Bird and sourcing consultancy, Quantum Plus.

The results of the survey are also timely in view of the recent comments made by Joe Harley, CIO at the Department for Work and Pension, who asked why as many as 70% of government technology-based projects and programmes ultimately fail.

The survey carried out by Bird & Bird and Quantum Plus sheds significant light on why outsourcing arrangements fail and what makes them more likely to succeed, finding strong evidence that companies can make an important difference to the success of their outsourcing by maintaining strong relationships throughout the lifetime of a contract. Continuity of personnel, strong governance and alignment of expectations are key hallmarks of success. The survey also revealed considerable resistance to in-sourcing as the preferred solution at the end of a lifecycle.

Commenting, Bird & Bird partner and head of the firm’s IT group, Roger Bickerstaff said:

“Outsourcing arrangements that are launched with fanfares of publicity often flounder once the initial glamour of the contract awards has worn off and the hard grind of operational reality has taken hold. We interviewed a number of experienced practitioners and specifically asked them about the crucial period between two and four years into the deal, when the original enthusiasms have often begun to dissipate. Our survey revealed that one of the key reasons why outsourcing contracts fail is when relationships are not consistent, when in particular, the senior people initially involved lose sight of the key objectives of their outsourcing.”

Eleanor Winn, Managing Director of Quantum Plus, added:

“The survey has confirmed what outsourcing practitioners always knew – that although companies contract with companies, it is the relationship between people that leads to success or failure. Well thought through governance structures which clarify roles and responsibilities and give specific procedures for handling change, innovation, escalation and disputes avoid ambiguity and give a shared framework within which people can develop relationships that work.”

The survey was based on a series of interviews with experienced practitioners working in customer and service provider organisations in both the public and private sectors and also through the completion of an online questionnaire. Interviewees were typically involved in a mid-to advanced stage in the life time of a typical 5 year outsourcing project. IT outsourcing represented the bulk of the arrangements covered by the survey with over 60% including IT Infrastructure, 53% Application Management and 38% Telecoms Management. Finance and Accounting was the business process outsourced by the most surveyed organisations.

To view the survey, please click here.

For more information on this survey please contact Natalie Arestis, PR Manager (020 7905 6248), Roger Bickerstaff (020 7415 6160) or Eleanor Winn (07966 242665).

-Ends-

Notes to Editors

About Bird & Bird

Bird & Bird is a full service international commercial law firm with a reputation for excellence in key industry sectors and areas of legal practice including outsourcing. With offices in Beijing, Brussels, Düsseldorf, The Hague, Hong Kong, Frankfurt, London, Lyon, Madrid, Milan, Munich, Paris, Rome and Stockholm and close ties with firms in the rest of Europe, Asia and the United States, we offer our clients local expertise within a global context.

As experts who genuinely understand the complex legal and business challenges and opportunities in each outsourcing transaction, lawyers in Bird & Bird's International Outsourcing Practice help clients to gain the best business advantage by providing practical, commercially focused business law advice in a strategic context, not just technical legal advice.

There is no standard formula for successfully implementing an outsourcing. Each deal is different. But, with over 20 years' experience in this specialist field, Bird & Bird's lawyers have developed exceptional legal and technical know-how of outsourcing practices, from now traditional technology and communications outsourcings to innovative transactions involving the outsourcing of business processes and back office functions.

About Quantum Plus

Quantum Plus is one of the UK's leading independent outsourcing advisors, helping clients to maximise the benefits their organisations can achieve through their sourcing strategy. Quantum Plus' tried and tested methodologies have supported many clients through the complex challenges of all stages of the Outsourcing lifecycle.

Our team of specialists are able to provide independent advice and guidance at every stage of the outsourcing lifecycle. What we offer to our customers is confidence: the confidence to move forward in their outsourcing initiatives knowing that their decisions are supported by expert involvement, analysis and review.

Quantum Plus achieved recognition in 2005 when it won the UK National Outsourcing Association's (NOA) "Outsourcing Advisor of the Year" award. In 2006 Quantum Plus achieved further recognition at the NOA awards in partnership with Mapeley, a market leading property investment company, when they were jointly awarded the prize for "Best Use of Outsourcing by an SME".

On 1 August 2005, Quantum Plus became a wholly owned subsidiary of Cornwell Management Consultants, who was in turn acquired by Serco Consulting in May 2007.

For more information on Quantum Plus please go to www.quantumplus.co.uk