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ISG White Paper

Mitigate the Risk of Value Leakage: Choosing the Best Path Forward in a Divested ITO Relationship

Many IT contracts today are structured as global agreements, with commitment and pricing based on volumes across regions and business units in place at contract signing. One of the challenges facing CIOs is managing services contracts when parts of their organization are split off because of a merger, acquisition, divestiture or joint venture activity. When faced with this kind of major organizational change, the CIO will likely need to decide the appropriate action for the outsourcing contracts in place.

This ISG white paper explores some of the questions that arise when a majority share of some part of the organization is “spun off” to a third party, such as the sale of an operating division or subsidiary. In addition to having to react to these events as they occur, the proactive CIO can also plan ahead as sourcing relationships are undertaken, so they will be better positioned to retain the value of these relationships in the face of future equity events.