Both clients and outsourcing providers are at getting better at squeezing the outsourcing dollars to the best extent they can. This takes a variety of shapes and forms but both have their own agendas on how, why and where to get their economies in. while clients try to get more done with less which is the latest mantra world over, the providers try to get more out of fewer resources. This happens more so in fixed price contracts where providers constantly try to improvise, automate and improve efficiencies to gain pricing advantages.

These have its pitfalls on both sides, unlike construction projects, for example, it is not easy to estimate IT spend more so complex ones that have varying components and dependencies on several accounts and sometimes even third parties.  Many of them have developed comprehensive modelling techniques that tend to serve well but are not sure shot with the accuracy.  There is always a 5 to 10% cushion or even higher but that tends to quickly evaporate.

Factors like duration of the projects, talents of the resources, bench time,  just in time resourcing like inventory in manufacturing, the financial savviness of teams involved in knowing what budgets they are opening, reviews of spending vs. budget regularly are other avenues to track to avoid squeeze down the line.

Sometimes the squeeze is applied in wrong areas that prove to be counter-productive. Pushing the can down the road is another option that tends to backfire.

There is no silver bullet to optimal spend or cutting costs to get to a number.  Prioritization is the key to accomplishing desired outcomes at optimal costs.  Squeezing just to score some brownie points or without the need to do it is another pitfall.  I have also seen areas where IT squeezes budgets while marketing spends the same without tangible results.

Making Rational decisions is the key – the squeeze an or course be applied to areas that don’t provide the payback or considered wasteful spending.