Bringing IT Back Part A: The Early Termination of Outsourcing Contracts

This IDC study is the first part of a two-part series examining the early termination of outsourcing contracts. Some of the largest IT outsourcing contracts signed in the past 10 years have quietly met an early end. This study reviews the outsourcing experiences of three case study companies that have terminated their respective outsourcing contracts and analyzes the reasons why these organizations canceled their respective contracts. This study also provides guidance to companies that are considering outsourcing or contemplating renegotiating or canceling their outsourcing contract. Part B (Bringing IT Back Part B: The Repatriation of IT Services and Impact on the Organization, which will be published by IDC later in 2007, analyzes how each of the companies approached the repatriation of IT services and associated personnel and how insourcing impacts the organization.

"Early termination, renegotiated and shorter-term contracts, and selective and multisourcing are a reality of the new way in which companies source their IT support. Outsourcing clients need to view strategies, such as early termination, as a way of better aligning IT to meet technology and business objectives. Vendors, on the other hand, need to evolve their strategy, whether it is as an end-to-end provider, a best-of-breed vendor, or an aggregator of outsourced support, and develop and market their capabilities to help clients navigate the new sourcing reality." ? Mark Schrutt, research manager, Outsourcing Services