Outsourcing isn’t great yet

By Scot Herrick | Job Performance

Feb 16

If you work in cubes and your position is in the mix for outsourcing, you already know this without the study information published in the Silicon Republic in Ireland, don’t you:

Enterprises entering into outsourcing arrangements are focusing too heavily on reducing costs through labour arbitrage alone, resulting in high levels of disappointment and conflict, even though most companies are realising the cost savings they had hoped for.

According to a new study by Deloitte entitled ‘Why Settle for Less’, 83% of companies which embarked on an outsourcing strategy achieved a return on investment of over 25%.

However, 49% of the executives surveyed indicated they would have defined service levels that aligned better with their company’s business goals if they could start their outsourcing projects over and only 34% said they had gained important benefits from their service provider’s innovative ideas or transformation of their operations.

In addition, by a 3-to-1 margin, the outsourcing service providers polled reported that their client companies did not have a solid outsourcing plan, lacked the operational data needed to make sound decisions and did not understand how the to-be organisation would really work.

Outsourcing requires tough goals, fearless implementation, and great management. As you can tell from the study, we’re not there yet.

But you knew that, right?