The potential benefits of outsourcing can be deceivingly alluring, and often cause organizations to rush into a relationship that proves to hurt the company more than help it. In this article [NAVY] from August 2008, an interesting side of outsourcing is exposed as it discusses the US Navy's decision to outsource its desktop system to EDS, a Texas-based vendor. Beating out IBM to earn the contract, EDS was thrilled to earn such a significant deal. However, it soon became obvious that the company was ill-equipped to make good on the expectations that the Navy had for it. In essence, EDS bit off more than it could chew and it would up being horrible for both parties involved.
The article brings to light two important precautions that must be made before outsourcing: careful analysis and knowing the capabilities of the potential company. Every business has an agenda and has goals, and as a manager is important to understand your own business's goals as well as the goals as the potential vendor. EDS was anxious to score such a big contract and made promises and claims in order to get the deal with the Navy. In the end, the company was unable to deliver and put the Navy in a bind. Outsourcing is risky business, and it is critical that a company has trust and confidence in its vendors and that the vendors have proven track records that indicate they will be able to fulfill your needs adequately.
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