Work out outsourcing cost benefit instantly with clear inputs, formula shown and shareable results.
Outsourcing savings must be net of retained governance cost, which is routinely underestimated at 8-15% of the contract value, and the one-off transition cost must be paid back within the contract term. Ignoring either produces business cases that never materialise.
Outsourced annual total
Total = Outsourced fee + Retained management cost
Payback
Payback years = Transition cost / Annual saving
Because the roles are new — contract management, service assurance, demand management — and do not appear in the current organisation chart.
Then the deal only works if you assume renewal on similar terms, which hands the supplier considerable leverage at renewal.