Oh dear, oh dear. Our first blog entry and already an outsourcing fiasco to bemoan, albeit an old one that has resurfaced.
EDS is being sued by BSkyB. The broadcaster alleges that EDS failed to fulfil obligations of a £48m contract for a customer service system that was first agreed in 2000. The main concerns are that EDS made fraudulent representations to secure a contract from BSkyB and failed to deliver its contractual obligations.The first rule of outsourcing (there are hundreds of ‘first rules of outsourcing’, but this is very near the top), is never to over-promise on a contract.
There is a long and dishonourable tradition of over-promising by outsourcing providers and an equally poor tradition of end users not being sure what they want when they sign multi-million pound contracts. The courts will eventually decide who is guilty of what in this case…
Over-promising has a good chance of delivering the contract – if you promise a lot while undercutting your competitiors, end users are likely to buy into your offering.
But the truth will out, delivery will be a problem, the contract may then be lost. Whether it is or not, the reputation of the outsourcer and the company that brought them onboard will take a bashing.
In outsourcing, as in life, there is no such thing as a free lunch.