Taxpayers and enterprises have been warned they face losing out on the true benefits of IT because of the continuing focus on price at the expense of the value channel players can offer.
The traditional hardware and software markets have already been cut to the bone, but there is increasing evidence that even large outsourcing projects are being won primarily on price.
Gartner warned in a survey that the outsourcing market faced a shake-up and AMD has called on more government buyers to choose local value against big brands.
According to Gartner, four out of five offshore outsourcing contracts for mid-sized to large firms in Western Europe were renegotiated as they had been signed to reduce costs and did not have the flexibility to cope with changing business needs.
"Companies have entered into offshore outsourcing agreements based on cost savings and short-term return on investment, with little thought given to their sourcing strategy," said Gianluca Tramacere, senior analyst for sourcing at Gartner.
Kirk Smith, outsourcing strategist at LogicaCMG, said offshore outsourcing was one of the few IT sectors enjoying double-digit growth and there was intense competition among providers.
"Couple that with the immaturity of customers and providers on deals and it has led to contracts and agreements that are almost impossible to comply with operationally," he said.
Duncan McIntyre, chief executive at Morse, believed too many contracts were sold on the basis of short-term gain: "Users need to look at the medium-term outlook for their business. There is a big focus on quarterly numbers and price, but that does not necessarily mean the best value for money in the long term."
At the same time, AMD has welcomed moves by the French, US and Japanese governments to open up IT procurement by de-emphasising the importance of brand in public tenders.
Dave Everitt, European product manager at AMD, said it had been working with local authorities to encourage support of alternative suppliers: "In the UK, each authority has an open hand and it would make sense to use more local suppliers."
Talking at the recent Straight Talk event hosted by Westcoast and supported by MicroScope, Peter Hain, MP and Leader of the House of Commons and Secretary of State for Wales, admitted there was an issue with tenders.
"Ministers decide on policies, but by the time they have worked through the civil service machine they tend to come out in an incredibly complicated form. We are continuing to work on that potential leveller... It is not acceptable to cut out small business," he said.
The traditional hardware and software markets have already been cut to the bone, but there is increasing evidence that even large outsourcing projects are being won primarily on price.
Gartner warned in a survey that the outsourcing market faced a shake-up and AMD has called on more government buyers to choose local value against big brands.
According to Gartner, four out of five offshore outsourcing contracts for mid-sized to large firms in Western Europe were renegotiated as they had been signed to reduce costs and did not have the flexibility to cope with changing business needs.
"Companies have entered into offshore outsourcing agreements based on cost savings and short-term return on investment, with little thought given to their sourcing strategy," said Gianluca Tramacere, senior analyst for sourcing at Gartner.
Kirk Smith, outsourcing strategist at LogicaCMG, said offshore outsourcing was one of the few IT sectors enjoying double-digit growth and there was intense competition among providers.
"Couple that with the immaturity of customers and providers on deals and it has led to contracts and agreements that are almost impossible to comply with operationally," he said.
Duncan McIntyre, chief executive at Morse, believed too many contracts were sold on the basis of short-term gain: "Users need to look at the medium-term outlook for their business. There is a big focus on quarterly numbers and price, but that does not necessarily mean the best value for money in the long term."
At the same time, AMD has welcomed moves by the French, US and Japanese governments to open up IT procurement by de-emphasising the importance of brand in public tenders.
Dave Everitt, European product manager at AMD, said it had been working with local authorities to encourage support of alternative suppliers: "In the UK, each authority has an open hand and it would make sense to use more local suppliers."
Talking at the recent Straight Talk event hosted by Westcoast and supported by MicroScope, Peter Hain, MP and Leader of the House of Commons and Secretary of State for Wales, admitted there was an issue with tenders.
"Ministers decide on policies, but by the time they have worked through the civil service machine they tend to come out in an incredibly complicated form. We are continuing to work on that potential leveller... It is not acceptable to cut out small business," he said.
