Chapter 3. Management Principles: Core Capabilities and Contracting

Based on all of our studies of IT outsourcing, successful sourcing practices in the public and private sectors include the following:

  • Base the sourcing strategy on assessment of business, cost, market capability, and technology.

  • Create the sourcing strategy with senior executives as well as IT executives.

  • Ensure that nine core capabilities are retained in-house, including the capabilities to buy and manage third-party providers extensively.

  • For IT-enabled activities targeted for outsourcing, create a formal request for proposal.

  • Invite external bids (and internal bids where appropriate).

  • Analyze proposals, including risk assessment and mitigation.

  • Negotiate detailed, short-term contracts. ...

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