A new survey indicates few companies have the right systems to manage outsourcing deals with multiple suppliers

IT outsourcing in Western Europe will continue to increase over the next two years, according to a new survey by Gartner. But the analyst firm warned that many companies face unnecessary risks because they have not developed coherent management strategies for outsourcing.

The survey of 300 firms found that the proportion of companies with moderate or high levels of outsourcing will grow from 67 to 81 percent by 2008. However, less than a third of companies claimed to have a formal sourcing strategy and instead made outsourcing decisions on an ad hoc basis.

This situation is unsustainable, according to Gartner’s report, which predicts growing problems as more firms move towards a multi-sourcing model whereby they work with multiple IT service providers. The survey found more than half of firms are already dealing with an average of four different service providers for IT outsourcing alone.

Gianluca Tramacere of Gartner said firms' failure to develop outsourcing strategies and set out clear parameters for outsourcing projects was contributing to the perception that a high proportion of projects fail.

"Firms need to be more clear on what is required and what the deal aims to achieve," said Tramacere. "Without a clear strategy customers tend to forget what the objectives were and then argue the benefits they wanted haven't been delivered. The deal is seen as failing when it actually did what was requested. "