Firms should not try and cut corners when it comes to IT outsourcing, it has been claimed.

Computerweekly.com reports the findings of a year-long study carried out by Compass Management Consulting of 120 outsourcing deals.

It found that firms are requesting discounts of up to 23 per cent from IT outsourcing companies in exchange for longer contracts.

However, the company warned that firms who drive too hard a bargain risk losing out in the long-term.

Speaking to the website, Robert Morgan, director at Hamilton Bailey said: "The outsourcer will have to take out costs by reducing the service levels, taking people out our even sweating assets by not refreshing technology as quickly."

Mr Morgan did add that firms could make savings if they discussed their future plans with the firm providing their IT outsourcing services.

In related news, a recent study by FileMaker found that while 82 per cent of school leavers are confident about their IT business skills, many firms do not give them the chance to put them in to practice.

More than half of small businesses (53%) believe that the most important benefit of outsourcing is guaranteed response times for IT support, London based Connect conducted the research in 2007.