Managing outsource agreements between client organisations and suppliers

Abstract

The outsourcing of non-core Information and Communication Technology services in the ICT industry has been successfully conducted for many years based on various models and frameworks. Client organisations embark on this for many reasons including cost savings, access to specialised skills and access to global resources to name but a few. This study identified and evaluated the management of outsource agreements between client organisations and suppliers with specific focus on creating an understanding of those factors that has a direct impact on the success of outsource agreements. The primary objective of the research study was to provide a comprehensive management guideline for client organisations embarking on outsource initiatives or planning to renew existing agreements. The secondary objective was to assist service providers with guidance on pitfalls and issues experienced in the management of such agreements and to highlight the lessons learned from the industry at large. The research was conducted by means of a literature study and empirical study. The literature study included background information on outsourcing, outsourcing theories as well as outsource management frameworks. Furthermore, it addressed lessons learned and issues and pitfalls to avoid by service providers. The literature review formed the basis for creating an understanding of those factors that has a direct impact on the success of outsource agreements. Based on the evaluation of the empirical study, it was concluded that client organisations that are planning to embark on the outsourcing or renewal of services need to follow a management framework with a full lifecycle in order to ensure success. The top issues that suppliers need to address are to ensure that a climate of trust exists between them and the client; they need to be as transparent as possible and ensure that they carry extensive business knowledge of the client being serviced.