Introduction

Large corporations run on a maturity curve where the basis of profitable business is often governed by internal efficiencies. These corporations lead the way in adopting new technologies and streamlining cost centers, yet they sustain high levels of operations. It is therefore natural that these corporations govern the largest global sourcing mandates spanning multiple service providers, locations, and resources, all hinged on critical performance metrics.

As these corporations search for a higher plane of efficiencies and performance, outsourcing has shifted from being a point solution for specific situations to being a widely harvested business practice. As large buyers continue to leverage new locations, outsource larger functions, and try newer sourcing models, one can expect their already bulky portfolios to become increasingly complex.

In our experience of working with Fortune 100 companies, we have observed that the largest outsourcing mandates are often fraught with redundancies, lack of checks and balances, and sub-optimal sourcing, all leading to a loss of precious dollars. Some of these issues are intrinsic and some contracted (literally). Most of these companies do not forget to include benchmarking clauses to sanitize what is contracted, but fail to regularly assess their internal cogs that lead to these losses.

This viewpoint looks at some of the typical issues that eat into outsourcing gains.