Survey: IT outsourcing often costs more than companies plan for

Outsourcing some IT functions can be a great option for many smaller businesses. But if the company doesn’t properly communicate with the provider, problems and confusion about costs can arise. 

While cost savings are a primary motivator for outsourcing some IT functions to a third party, businesses often find they don’t save as much as they expected, according to survey conducted by Lieberman Software at the InfoSec Europe 2012 conference in London.

Just under half (49%) of the businesses surveyed said their IT outsourcing agreements cost them about as much as they originally planned. And 42% said outsourcing ended up costing more than they planned, including 16% that said the increase was significantly more. The remaining 9% actually wound up spending less than they expected.

The providers’ may be to blame for those unexpected costs. In fact, 64% have felt that an IT outsourcing firm has made up more work to get extra money from the organization.

In general, the majority of companies trust the work that’s performed by third parties, with 52% saying they trust the work of outsourcing providers as much as what’s performed internal staff, and 15% actually trust third parties more than their own employees. However, that still leaves 33% that do not trust the work performed by IT outsourcing firms.

This doesn’t mean that IT outsourcing isn’t beneficial for businesses in many situations. But it does mean many businesses need to improve their communication with their outsourcing providers.

Often, companies spend energy negotiating the terms of a service contract, but don’t give themselves a process for checking in with the provider. Experts recommend setting up regular meetings so that the company is in the loop about what the provider is doing — and so the provider is kept up to date regarding the company’s evolving needs.

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