Hello Spyro2120,
The amount of money spent on outsource project management by companies
that outsource their business processes or IT work is on the average
4.5 percent of the total contract value and can be as high as 15
percent.
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CIOL IT Unlimited: 3 - 12 percent
"Best practice companies spend three to 12 percent of what they spend
on the service provider to manage the sourcing relationship. As there
is a lot of pressure on CEOs/CIOs to control the IT budgets and also
to reduce the technology spending, cost control in IT management, etc,
more and more outsourcing for offshore will happen in countries like
India," Rao pointed out.
CIOL IT Unlimited
http://www.ciol.com/content/search/showarticle1.asp?artid=40310
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Tech Update IT Management: 5 to 12 percent
Q & A on Strategies for Managing Outsourcing Relationships
By Carrie Lewis
?Our discussions with end users engaged in outsourcing indicate that,
on average, users spend from 5 to 12 percent of the total contract
value on managing the relationship. The cost of managing a $100
million contract contracts that focuses on specified service levels
(i.e., data center and desk top outsourcing), leans toward the low
end?from $5 million to $8 million. On the other hand, the cost of
managing contracts that focus on managing specific business results
(i.e., more complex business process outsourcing and applications
outsourcing contracts) leans to the high end?ranging from $8 million
to $12 million or more depending on the specified business results.
Because reducing costs is one of the top drivers of outsourcing, the
cost of internally managing a multi-million outsourcing deal is too
big to be overlooked?
Tech Update IT Management: October 2003
http://techupdate.zdnet.com/techupdate/stories/main/Managing_Outsourcing_Relationships.html?tag=tu.tk.7806.f3
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Excerpt:
?Many companies are outsourcing their IT functions in an effort to
lower costs, but some are not attaining the cost savings they
expected. Only 21.1 percent of companies reported a cost savings
greater than 20 percent as a result of their IT outsourcing efforts,
according to a recent survey conducted by peopleł, a Gartner, Inc.
company. Conversely, 18.4 percent of companies did not achieve any
cost reductions, while 9.2 percent experienced an increase in costs
from their IT outsourcing contracts.?
"There's an assumption by many companies that they can save a large
percentage of their budgets by outsourcing some or all of their IT
capabilities, however the true savings are not always as promising as
one would expect," said Lily Mok, a senior consultant at peopleł.
"Many companies often neglect to factor in all costs associated with
managing the outsourcing engagements, which average 4.5 percent of the
total contract value and can be as high as 15 percent. It is important
to set reasonable goals and expectations regarding the benefits that
could be achieved through IT outsourcing."
Brainbox.com: November 2003
http://www.brainbox.com.au/brainbox/home.nsf/0/81FAA774C679ABF449256DE4002D0F24?opendocument
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CIO Magazine: 3-12 percent
By the Numbers: Outward and Upward with Outsourcing
"Best practice companies spend 3 percent to 12 percent of what they
spend on the service provider to manage the sourcing relationship,"
says Gartner Measurement Research Director David Ackerman.
Aug. 1, 2002 Issue of CIO Magazine: Trendlines
http://www.cio.com/archive/080102/tl_numbers.html
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From Tech Update: 5 to 7 percent
?In addition to transition costs, enterprises must account for the
cost of project management, international travel, communications and
handling of cultural issues in assessing the cost savings of going
offshore. For example, in addition to transition costs, 5 to 7 percent
of a typical enterprise offshore outsourcing project is spent on
managing the relationship.?
Tech Update: December 4, 2003
http://techupdate.zdnet.com/techupdate/stories/main/Market_leaders_cost_savings_BPO_offerings_print.html
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The Cost of Managing an Offshore Contract
?Managing the actual offshore relationship is also a major additional
cost. "There's a significant amount of work in invoicing, in auditing,
in ensuring cost centers are charged correctly, in making sure time is
properly recorded," explains DHL's Kifer.?
?Expect to pay an additional 6 percent to 10 percent on managing your
offshore contract.?
CIO.com Archive
http://www.cio.com/archive/090103/money.html
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From the Gartner Weblog: 5 ? 10 percent
According to Ian Marriott, Research Vice President,?companies should
invest at least 5 ? 10 percent of the value of an outsourcing deal in
building and developing the skills of an internal team to manage
outsourced relationships effectively. Right now, most companies don't
know how much they are spending, and those that do are spending too
little.?
Gartner Inc.: November 2003
http://outsourcing.weblog.gartner.com/weblog/index.php?catid=44&blogid=9
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Additional Information that may Interest you:
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Directory of articles regarding Operations Management - Outsourcing
http://www.themanager.org/Knowledgebase/Operations/Outsourcing.htm
Overseas outsourcing to rise in 2003
By Ed Frauenheim, Special to ZDNet
10 July 2003
http://www.zdnet.com.au/insight/0,39023731,20276135,00.htm
Outsourcing Supply Management
Operations for Manufacturing
Facilities
May 20, 2003
http://www.ism.ws/ConfPastandOnlineDaily/Files/May03/KJ-Patton.pdf
Study: Outsourcing Tech Jobs Helps Economy
Associated Press
By RACHEL KONRAD AP Business Writer
Tuesday, March 30, 2004
Project Management Knowledge Base
http://projectmanagement.ittoolbox.com/news/dispnews.asp?i=112439
Search criteria:
Companies spend ?* percent" "outsource project management"
?* percent? managing OR manage outsource projects
I hope you find this information helpful! If any of the information is
unclear, please ask for clarification.
Best regards,
Bobbie7 |
