By Steve Ranger, 14 December 2005 15:50
NEWS
Nearly two-thirds of UK companies believe their outsourcing contracts are "not delivering" the benefits they had hoped for.
A survey of 100 companies by law firm Denton Wilde Sapte has found nine out of 10 outsource some aspect of their business - generally IT support or call centre functions but also business process operations such as human resources or accounting.
But 61 per cent said their outsourcing is not delivering - and nearly three-quarters (72 per cent) are concerned about the flexibility of their current deal.
The head of the firm's technology, media and telecoms sector, John Worthy, said: "This should provide a wake up call to outsourcing service providers.
"In our view customer expectations could be better met by shifting the focus of outsourcing deals towards more business-orientated key performance indicators and ensuring that the deal supports the business relationship effectively."
Nearly two-thirds (62 per cent) of the firms surveyed see cost cutting as the central advantage of outsourcing, followed by gaining specialist skills (59 per cent).
But for many the greatest disadvantage of outsourcing is higher costs - generally driven by hidden costs underlying the contract - followed by the loss of internal knowledge, the survey found.
Of the companies that outsourced IT, 33 per cent also outsource their helpdesk facility, 28 per cent their call centre and 17 per cent HR.
Comments
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1. martyn
Now wait for someone to slime their way in claiming that all of the shorfalls in delivery are the customers fault - shouldn't take long
2. anonymous
Having been involved in outsourcing on both sides of the industry I would suggest that outsourcing usually delivers what it was intended to.
Where the objective is to cut costs, costs are usually cut -along with service; where the objective is to off-load assets from the balance sheet cash is generated; but if there are no service delivery goals customer satisfaction may not be acheived.
Where it is change management change is generated, but at a cost.
Customers need to understand four things:
- Why they are outsourcing ("because it isn't a core comptency" doesn't mean anything in finanacial or service terms)
- What the service metrics are today
- What the costs of each service is today
- How the outsourcer is going to improve things and sustain that improvement over time (not just that they say they will).