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Typical Challenges on Outsourcing Engagements
Change
Management
Strategic Alignment:
Misalignment between business goals and outsourcing outcomes.
Sourcing decisions often made on cost, not business impact.
Change Adoption:
Business and internal teams resisting vendor collaboration.
Culture clash, job security fears, siloed communication creates lack of acceptance.
Organizational Alignment:
Lack of agreement on roles & responsibilities holistically.
Provider - Internal IT - Business alignment to drive value.
Delivery
Vendor Governance:
Lack of transparency, control, or accountability from providers.
SLAs and KPIs often not clearly tied to business value.
Performance Issues:
Service delivery lags, poor incident resolution, ticket fatigue.
Don't know if it’s people, process, or contract.
Transition Risks:
Fear of operational disruption during transitions.
Loss of specialty and legacy skills and resource retention.
Why IT Outsourcing Engagements Fail — Root Causes Explained
Implementing a Managed Service Outsourcing Model is an extremely complex initiative and most organizations will require some level of intervention while moving towards steady state
Insufficient Change Management:
Often, insufficient consideration is given to the profound impact that a change of this magnitude can have on both the organization and employees.
Changes such as the way that the business interacts with IT, friends and colleagues being displaced and a manager’s success now being dependent upon the performance of a third party are realities on all outsourcing engagements.
Skills & Performance Gaps: Protect company & industry SMEs
With labor markets tight, vendors will struggle when sourcing large numbers of resources, especially those with specialty or niche skills. The vendor will also be challenged by the client’s comparison of these new resources against the legacy workforce, many of which may have had decades of client specific experience.
It is not unusual for a vendor to have to replace 10%-15% of the team due to skills fit within the first twelve months of operations.
Loss of Critical Thinking: The key to Application Stability
In an IT environment, application support teams play a vital role in maintaining system availability, ensuring business continuity, and enhancing customer satisfaction. Without critical thinking, these teams risk falling into reactive behavior—treating only the symptoms of problems rather than identifying and addressing root causes.
By embedding critical thinking into their processes, application support teams can proactively solve issues, optimize performance, and innovate support practices, moving from firefighting to strategic problem-solving.
In many cases, the reasons for embarking on an outsourcing journey as well as the evaluation criteria for vendor selection is lost upon contract award. Many outsourcing engagements are driven to reduce the cost, yet cost-to-serve metrics are rarely leveraged as a measure of success.
The more common approach is to view the adherence to Service Level Agreements (SLAs) as the primary measure combined with a Balanced Scorecard to bring in holistic measures across IT and the business.
Poorly Defined Success Criteria: a Balanced Scorecard is key
Details on our Recovery Approach to Application Outsourcing engagements, Click Here.
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