YOU’VE GOT TO KNOW WHEN TO FOLD ’EM: CHANGING A FAILING OUTSOURCING RELATIONSHIP RESULTS IN 28% ANNUAL SAVINGS.
Once they’re in, vendors often think they have you. It’s not uncommon for companies to feel handcuffed to a vendor relationship that starts great but then begins to feel like a hostage situation. A global service provider based in California outsourced its mission-critical global data centers, network infrastructure, and operations to one of the largest IT services firms; however, after two years, the vendor became increasingly unresponsive to the provider’s changing business needs and requirements for increased service levels. Having gained full control of the outsourcing environment, the IT services firm also increased fees, leaving our client with little option but to overspend.
The service provider engaged Capto’s team to investigate alternatives to continuing the existing relationship and present solutions for restoring the provider’s control over its IT services. They needed to improve service levels, reduce costs, and respond more effectively to changing business demands.
THE SYNAPTIC SHIFT
We always try to mend a relationship first, but in this case, it soon became clear to all parties that the vendor couldn’t provide the required services with the necessary agility at an acceptable cost. We helped negotiate a separation agreement beneficial to both parties.
The client eventually chose to move the functionality back in-house. The Capto team led the effort, establishing and staffing a network and systems management center in Canada, two data centers in the United States, one in the United Kingdom, and call centers in Ireland and Canada that provided first-line, end-user support. These operational elements were closely linked with application development teams in Ireland and Vietnam and with testing services in India.
- The customer took advantage of lower personnel costs in Canada and Ireland and technology improvements in servers, storage, telecommunications, and systems management tools that dramatically reduced operating costs and increased service levels and responsiveness in comparison with the prior outsourcing relationship
- The entire transition was completed in six months and resulted in 28% annual savings