Tuesday, July 26, 2011
How IT outsourcing could lead to cost overruns
World’s prominent IT organizations have raised concerns on frequent cost overruns in IT outsourcing, which is getting larger and unorganized. Both stakeholders in outsourcing – customer and vendor – are all into loss due to cost overruns, as former has to churn out extra bucks whereas later lose opportunity to build long-term relationship. So, what could be the best option to tackle this fiasco?
Three components need to be improved to prevent incidences of cost overruns that are – software development methodology and planning, project management, and budget organization.
Software Development Methodology
Usually, a software development company or customer fails to understand the importance of development methodology applied and try to choose as per their comfort. This needs to be changed from self-centric perspective to research driven logical-perspective while choosing methodologies.
Project management is the weakest link because both customer and vendor don’t insist upon having a team of professionals to handle project properly.
Often due to wrong or inflexible budget organization many unwanted or unpredictable cost issues occur that if not tackled on time it may lead to higher cost.