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The temptation to sign long-term contacts is great, especially when some outsourcers sweeten the deal with deep discounts of up to 25% for 10-year renewals. But all the evidence is that shorter contracts are more successful in terms of both financial and customer service outcomes. Toward the latter stages, longer-term contracts can not only become misaligned with business imperatives, they can also become misaligned with prevailing market price by as much as 40%.
So what can a business do to protect itself against the risks of mortgaging the future for more immediate financial gain?