Almost two thirds of outsourcing fails

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Up to 65% of all outsourcing contracts worth over 20m unravel before their full time, according to a recent study by management consultants Compass. Europes 4bn outsourcing industry is entering a mid-life crisis, the report concludes. Uncompetitive costs and negative customer services are blamed for creating a new mood of mistrust. Rob Lewis reports.

The costs to both parties of this level of failure are high and the legal and advisory costs can quickly escalate, says Simon Scarrott, head of business development at Compass. However, the real cost impact arises as the issue becomes a business problem and constrains strategic freedom for the future as well as the negative effect on current operations.

The study analysed 240 contracts over 24 months. Invariably, outsourcing providers pri...

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