Quantitative aspects of outsourcing deals

Abstract

There are many goals for outsourcing information technology: for instance, cost reduction, speed to market, quality improvement, or new business opportunities. Based on our real-world experience in advising organizations with goal-driven outsourcing deals, we identified the most prominent quantitative input needed to close such deals. These comprise what we named the five executive issues enabling rational decision making. They concern cost, duration, risk, return, and financing aspects of outsourcing. They add an important quantitative financial/economic dimension to the decision making process. Based on inferred outcomes for the five executive issues, we address the easily overlooked aspects of selecting partners, contracting, monitoring progress, and acceptance and delivery conditions for contracts.

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