In what some commentators say can affect controversial outsourcing actions by government agencies, a new study indicates that large companies that have outsourced information technology and business process operations have been disappointed and are choosing to bring them back in-house and explore other alternatives.  According to a study released April 19 by Deloitte Consulting, 79 percent of respondents indicated they have had significant negative experiences with outsourcing projects citing increased costs and complexity.  The study participants reported that cost savings failed to materialize and unexpected complexity (e.g. 10,000 page contracts) required extensive senior management attention.  In addition there were violations of intellectual property rights, employee backlash over loss of operations, diminished flexibility due to multi-year contracts and over dependence on a single vendor’s services.  The report identified limited circumstances where outsourcing can continue to provide useful solutions such as in rapidly changing industries where one transformed operation can be temporarily outsourced, outsourcing “commodity” functions (e.g. webhosting, mailroom operations) that are non-core to the business, and helping to spread high risk operational and financial functions (e.g. disaster recovery) but predicted outsourcing will soon lose its status as a management fad.  The survey is available online at “www.deloitte.com/dtt/research ”.

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