There's no shortage of take up for outsourcing services of all kinds.
Why should this be? The superficial answer is cost reduction - it's the received wisdom. Engage a third party who is 'expert' in your non-core activity and they will take away a 'problem' and reduce costs.
There's good evidence in support. Lacity and Willcocks, in their book 'Global I.T. Outsourcing - In Search of Business Advantage', give evidence of strategic advantage gained in the following areas:
Not everyone has been this lucky. Dataquest found 53% of European contracts were being renegotiated once underway. 8% were cancelled altogether and a further 16% switched supplier.
It gets worse. Weill and Broadbent (Harvard) studied fifty-four businesses over five years. In their paper 'Leveraging the new Infrastructure', they found that those outsourcing at a faster rate had achieved lower costs but also experienced greater strategic losses compared with organisations that did less outsourcing.
Those losses included:
This is confirmed by Lacity and Willcocks having studied 75 companies over ten years.
"Despite the rapid growth in I.T. Outsourcing, - most companies are still seeking the elusive 'added-value' they anticipated".
BPO fairs little better. Accenture research shows 52% of executives interviewed felt they had limited success in achieving their objectives.
So, there's the trap - hurry into outsourcing and, if you do it right, your costs will go down - but - and it's a big but! - you stand a very real risk of putting your longer-term competitiveness at risk.
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