Why Is Sustainable Outsourcing Important?

Outsourcing success is never guaranteed. The Outsourcing Center and the Farmer School of Business Administration at Miami University, Florida, USA,1 examined the causes of outsourcing failure and found that 11% of the 256 respondents identified poor communication as a frequent cause of outsourcing failure, whereas 40% of the respondents believed that better communication would add more value to the outsourcing relationship. According to the Outsourcing Unit at the London School of Economics, UK, “The outsourcing highway is littered with casualties.” It cites multiple examples of outsourcing failure since 2000,2 including the following: UK retailer Sainsbury’s, which announced in 2004–2005 a write-off of $254 million of IT assets and a further $218 million write-off of automated depot and supply-chain IT, the aftermath of a failed seven-year deal to outsource its IT operations;US financial services firm JPMorgan Chase & Co., which scrapped a $5 billion contract in 2004 with the intention of moving the IT work back in-house; andthe remarks made by the chairman of a powerful UK House of Commons committee, who described an American outsourcing company as “cowboys who should be run out of town” over their handling of the Lorenzo electronic patient record system for that country’s National Health Service.3