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• Vendor in driver's seat—Each outsource vendor has methods and procedures for its service. The hiring organization and its employees will have to conform to those procedures.
• Technology direction—Unless the contract requires otherwise, the outsource vendor chooses the technology that it wants to implement. If the vendor, for some reason, is slow to pick up on a significant new technology, then the hiring organization will be slow to attain benefits from that technology. An organization can find itself at a competitive disadvantage because it cannot offer the same information systems (IS) services as its competitors.
• Potential loss of intellectual capital—The company may need to reveal proprietary trade secrets, methods, or procedures to the outsource vendor's employees.
• Product fixes, enhancements in wrong priority—Quality vendors track software failures and problems and fix them according to a set of priorities. When a company outsources a system, it no longer has control over prioritizing those fixes. Such control belongs to the vendor. A fix that might be critical to the organization might be of low priority to the outsource vendor.
• Vendor management, direction, or identity changes—The outsource vendor may change management, adopt a different strategic direction, or be acquired. When any of those changes occur, priorities may change, and an outsource vendor that was a good choice at one time might be a bad fit after it changes direction. It can be difficult and expensive to change an outsource vendor when this occurs.
• Chief information officer (CIO) may become superfluous—When users need a critical service that is outsourced, the CIO must turn to the vendor for a response. In time, users learn that it is quicker to deal directly with the outsource vendor, and soon the CIO is out of the communication loop. At that point, the vendor has essentially replaced the CIO, who has become a figurehead.
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