IT outsourcing fails to stack up for retailer

The decision by Sainsbury’s to scrap its £2.1bn, 10-year IT outsourcing contract with consultancy Accenture highlights the importance of “not leaping on the outsourcing bandwagon”, according to experts.

Last month the supermarket chain terminated the agreement – one of the largest such deals in the UK – five years early, saying it had changed its IT focus and wanted to move expertise back in-house.

Hundreds of IT staff now employed by Accenture under the terms of the deal are expected to return to Sainsbury’s.

The National Outsourcing Association (NOA), a best practice group, said the move was evidence that Sainsbury’s went into the arrangement unprepared for the process.

“If companies have had their fingers burned through outsourcing, then the likelihood is that they leapt onto the outsourcing bandwagon without having the correct procedures in place,” said a spokesman for the NOA.

“Outsourcing does not mean ‘out of sight, out of mind’ and saving money into the bargain,” he added.

Firms must have the right procedures and management structures in place, he said. “Offshoring should not be considered a short-term profit-boosting solution.”

Sainsbury’s said the deal was cancelled due to a change in direction, not a lack of results. “During the past five years, Accenture has been instrumental in improving [our] IT capability,” said a statement.

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