IT Outsourcing contracts are a specific and complex type of service that require from providers special attention to manage a long relationship at optimal cost. The challenge is to identify the best cost structure, cost methodology and identify IT services variance to manage a specific contract with the highest level of standardization.

Due to the specificity of our work, the research methodology chosen is case study research, applied to seven contracts. Our research showed that IT Outsourcing providers suffer from several sources of variance in services, increasing contract
costs. However, due to economic downturn and competition, organizations are pursuing cost reductions, and providers should take this opportunity to trade-off customization (a characteristic of IT Outsourcing contracts) by standardization (a
characteristic of cloud offering).

The conclusions of our research show that providers need to have a well developed cost management system, and mechanisms to control variance, in order to have useful information about how performance in one contract might affect a different one, because some contracts are silos but others can use a common structure.