Think Twice Before Signing an Outsourcing Agreement!

18 December 2020 Internet, IT & e-Discovery Blog Blog
Authors: Peter Vogel

CIO.com reported that “One of the biggest mistakes an IT organization can make when outsourcing is failing to consider the total cost of the relationship — including all the hidden costs that are likely to accrue.”  The September 30, 2020 article entitled “The hidden costs of outsourcing” included these comments from Daniel Masur (at Mayer Brown) about #15 Regulatory requirements:

The global proliferation of privacy and cybersecurity legislation creates challenges for all companies,…, but an outsourcing provider’s service delivery solution can exacerbate a company’s compliance challenges when the provider processes or stores its data in new or different geographies.

An outsourcing customer must pay close attention to whether the proposed service delivery solution will require it to incur the cost of complying with privacy or cybersecurity requirements it would not otherwise be subject to or expose it to potential liability in such jurisdictions,…

Here are all 16 issues that may lead to increased costs:

  1. Unanticipated disruption
  2. Organizational change management
  3. Unnecessary change orders
  4. Lax demand management
  5. Consulting creep
  6. Insufficient governance
  7. Third-party risk
  8. Failure to innovate
  9. Aspirational services
  10. Retooling for intelligent automation
  11. Knowledge loss
  12. Duplication of work
  13. Employee disengagement
  14. Provider integration
  15. Regulatory requirements
  16. Bubble costs

What has you experience been in outsourcing?

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