Cost Management in IT Outsourcing Contracts: The Path to Standardization
IT Outsourcing contracts are a specific and complex set of IT services that require providers to give special attention to manage a long relationship at optimal cost. The challenge is to identify the best cost structure, cost methodology and IT services variance, in order to manage a service with the highest level of standardization. Due to the specificity of this work, the research methodology chosen is case study research applied to seven contracts. This research shows that IT Outsourcing providers suffer from several sources of variance in services and increasing contract costs. However, due to economic downturn and competition, organizations are pursuing cost reductions, and providers should take this opportunity to trade-off customization (a characteristic of IT Outsourcing contracts) for standardization (a quality of cloud offering).