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Determining capabilities of IT-enabled outsourcing service providers: A capability model and methods Executive summary ©Carnegie Mellon University October 4, 2001 Version 1.0 Version 1.0 10/8/2001 Over each of the four years in Dun Bradstreet’s Barometer of Global Outsourcing, companies have reported that between 20% and 25% of all outsourcing relationships fail in any two-year period. Half of the relationships will fail within five years. The reasons cited for failure are remarkably similar across all types of relationships. Nearly 70% of the respondents note that the outsourcing supplier ‘didnt understand what they were supposed to do’ and ‘the cost was too high and they provided poor service.’1 Introduction In the last few years organizations, driven by increasing competitive pressures, are delegating one or more of their information technology-intensive business activities to an external service provider. In spite of reported problems, more than 30% of the organizations that have already outsourced one business process are actively searching for additional outsourcing opportunities in other areas.2 The business processes being outsourced range from routine and non-critical tasks, which are resource intensive and operational in nature, to strategic processes that directly impact revenues. The rapid evolution of the global telecommunications infrastructure, and the increasing availability of bandwidth, has facilitated the design and delivery of outsourcing services from geographically distributed locations.
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