The majority of practitioners vote yes on outsourcing.
Is outsourcing a standard business practice? According to the majority of Deloitte’s 2012 Global Outsourcing and Insourcing Survey respondents, yes. But are executives happy with their experience? That answer falls somewhere in the middle, with most calling for growth and process improvement. The survey queried executives across all industry sectors, with 70 percent of respondents working for an organization with global operations.
The report found key findings in the following areas:
Current and future outsourcing
• Outsourcing continues to go mainstream, becoming another standard business practice which should be evaluated as business needs mandate. Sixty percent of respondents report that outsourcing is a standard practice at their organization.
• The outsourcing market continues to confuse outsourcing with offshoring. Many respondents still see the two processes as inseparable—even though many times outsourced work never leaves the originating country.
• Information technology, finance, and human resources continue to lead other business processes in outsourcing, though all business processes are expecting to see increases in the use of outsourcing and offshoring in the near future.
Contract and vendor performance
• Partnering and communicating expectations are the more important factors that determine success. Vendor management organizations, whilst highly competent at day-to-day activities, find themselves underused when it comes to driving strategic value.
• A significant number of respondents have terminated contracts with their vendors in the past, primarily due to concerns with the quality of services.
• Insourcing, though rare, does occur. We are beginning to see more clients contemplating insourcing functions due to vendor non-performance or changes in business strategy.
Most recent outsourcing experience
• Though generally satisfied with their most recent transaction, many respondents reported lower than expected actual cost reductions.
• The average length of the outsourcing transaction from strategy to contract signature ranges from 23 to 46 weeks in duration.
• Respondents list underestimating scope by the vendor as the largest contributor to deal dissatisfaction, and respondents use vendor communications and escalations most often to remedy deal dissatisfaction.