The seven deadly sins of outsourcing

While outsourcing is a powerful tool to cut costs, improve performance, and refocus on the core business, outsourcing initiatives often fall short of management's expectations. Through a survey of nearly a hundred outsourcing efforts in Europe and the United States, I found that one or more of seven "deadly sins" underlie most failed outsourcing efforts: (1) outsourcing activities that should not be outsourced; (2) selecting the wrong vendor, (3) writing a poor contract; (4) overlooking personnel issues; (5) losing control over the outsourced activity, (6) overlooking the hidden costs of outsourcing, and (7) failing to plan an exit strategy (i.e., vendor switch or reintegration of an outsourced activity). Outsourcing failures are rarely reported because firms are reluctant to publicize them. However, contrasting them with more successful outsourcing efforts can yield useful "best practices.".