One of the popular reasons why most companies outsource is cut on their cost therefore experiencing financial drain should be out of the question. Though that is the case, most companies still experience financial drain their outsourcing contracts.

This was the conclusion derived from the white paper by TPI Inc. The reason why most companies experience financial drain is because of their neglect in recognizing economic factors as something which could have a big impact in their outsourcing deals.

In line with this, TPI offers these three basic guidelines which could help in preventing companies to experience financial drain in their outsourcing contracts:

How to Avoid Financial Drain in Outsourcing:
a. Determine the appropriate portion of the "outsourcing market" basket subject to inflation/deflation
b. Select the appropriate index
c. Build a conservative, flexible approach into the contract