Gartner: Most companies unfit to manage outsourcers

Most companies are unprepared to properly manage the outsourcing vendors they hire and to closely monitor their work, Gartner Inc. has found.

Gartner forecasts that by 2005, 70 percent of companies will use more than three IT service providers for projects in key areas, but that less than 10 percent of companies will be prepared to effectively manage the outsourcers’ work.

Without proper oversight and supervision, companies can’t ensure that the goals and expectations of the outsourcing engagements are being met. This in turn often yields a low return on service value, particularly when the client has hired several outsourcers that need to collaborate and interact, according to Gartner’s new report “Successful IT Outsourcing: Strategies, Tactics and Management Approaches for Effective Strategic Sourcing.”

Companies need to understand that they must proactively command and preside over their outsourcing engagements, keeping close tabs on outsourcers’ work and making it clear to them that they must work well together to achieve project objectives.

The road to success starts with developing a sound overall sourcing strategy, said Chris Ambrose, a Gartner analyst. “The key to managing either a single outsourcer or multiple ones is to develop the right governance model, the right organizational structure, the right balance of skills and establishing the right roles and responsibilities within the enterprise,” he said.

It is important for IT managers and chief information officers (CIOs) to heed this advice because companies today are more likely to hire multiple service providers than in the past. “You still see some single-provider contracts in the marketplace, but we’re definitively seeing more and more companies looking to work with multiple providers for key service requirements,” he said.