Tuesday, April 06, 2004

Outsourcing can slash comms costs by a third

But it's still a risky move, warns Gartner…

Leading-edge businesses prepared to outsource all their communications infrastructure could slash their telecoms costs by up to a third, according to a new research by Gartner.

The report claims rising costs of technical skills, training and round-the-clock support as geographic boundaries expand will push up communications costs to an average of $2,500 per employee per year, forcing CIOs to consider handing it over to a third party.

"Already, some very large companies and government organisations consider that telecommunications are not part of their core competence," the report said. "By outsourcing, they are looking for benefits, which include reducing their internal communications management and getting optimal pricing in their home country and abroad."

But Gartner admits few organisations have yet embraced this approach because of the risks involved.

"Few organisations have risked outsourcing all their communications. Most do not even consider it, or find all sorts of reasons not to do it. Outsourcing all communications is a leading-edge approach. So far, no communications provider has fully demonstrated its ability to cope with all enterprise requirements over five years," the report said.

Gartner's advice to those firms looking at communications outsourcing should ensure they have "rock-solid" contracts, which define what is expected from the supplier, how costs will be controlled and how changes will be made - with the organisation having the final say on what they want.

But companies with small networks and less than $10m in telecommunications expenditure are advised not to consider full communications outsourcing.

Aside from the bottom-line cost savings, other benefits of outsourcing include more agility and easier application management. But there are hidden costs too, warns Gartner.

"These benefits come with a price," the report said. "Usually, the cost of networking increases. Mobile and voice may not be included. As contracts get bigger, controlling providers and exiting is more difficult."