More than half of FTSE 350 companies have been forced to exit or renegotiate an outsourcing contract before the end of its term, research published this week shows.

The survey from law firm Addleshaw Goddard says poor service, lack of control and hidden costs are usually to blame for failing outsourcing contracts.

‘Companies often embark on outsourcing deals with rose-tinted spectacles and do not anticipate what could happen when they go wrong,’ said Addleshaw Goddard’s technology and outsourcing head Margaret Harvey.

Most firms have renegotiation or break clauses because the cost of technology falls over time, says Forrester analyst Euan Davis.

‘It is vital companies reach their service level agreements to avoid failure,’ he said. ‘When deals go sour, many companies have lost the knowledge required to bring services back in-house.’