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IT outsourcing: what to consider before signing a contract

Majority of companies consider outsourcing of IT services and processes as a magic tool to solve all of the problems in IT. However most companies ignore risks that arise when processes are outsourced. There are numerous unsuccessful outsourcing projects of small companies trying to outsource one or two IT services to the big ones that tried to outsource all the IT. Where to pay attention, when making a decision and signing an agreement IT services outsourcing? First, it is necessary to make it clear what you are giving for outsource, what IT services and/or processes you want to outsource exactly and define the measurable parameters of such services before and after in terms of costs, availability, reaction time, influence on business in case of its inaccessibility. Service/process outsource should bring in an additional value in the form of better costs. Every action should consider the economy of the matter. Secondly, it is necessary to understand the proposed quality. For this purpose, you can conduct a test transition of a non-critical service with a low level of maturity for outsourcing for a period of 1-2 months, after which you can measure it. Thirdly, it is necessary to determine the criticality and maturity level of IT services and/or processes that are planned for outsourcing. Do not outsource company's key processes in any case. Outsourcing is recommended for non-key processes and services. Finally, the processes and services transferred to outsourcing are defined, the outsourcing company is chosen. What to consider before signing the contract?

  1. Pay attention to the terms of the contract termination and transfer of the service/process back. This need may arise if the economic feasibility of outsourcing disappears.

  2. Clearly describe all possible and foreseeable situations regarding the outsourcing of the process. If you do not describe it, you may get extra charges.

  3. Describe the responsibility of the outsourcing company for the coverage of business losses, lost profits in case of exceeding the acceptable idle time and recovery time.

  4. Develop a backup plan in the case of outsource company bankruptcy. Everything may happen.

  5. Analyze the risks and understand the dependence of your business from outsourcing companies. Understand the number of processes, their interdependence, the resources needed for management, and dependency elements).

The most important – do not forget that transferring IT services for outsourcing, does not transfer the responsibility to the outsourcing company. The responsibility for the IT service/process remains within your company through the control of its provision.

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