Companies Look Beyond Cost Reduction When Choosing An Outsourcing Partner According To Capgemini/IDC Bi–Annual Survey
Companies More Concerned With Focusing on Core Competencies, and Want a Collaborative Partner to Share Risk and Reward
25 April 2005
With an increasing number of companies turning to Business Process Outsourcing (BPO) as a strategic tool to improve efficiency of business performance, IT outsourcing has the biggest potential upside to companies over the next three to five years, followed by customer care and F&A outsourcing, according to a bi–annual survey conducted by IDC and Capgemini U.S. LLC.
Capgemini, a global leader in consulting, technology and outsourcing, and IDC, the premier global market intelligence and advisory firm in the information technology and telecommunications industries, surveyed almost 200 participants attending the IDC Outsourcing Forum East in New York this week to better understand organisations’ business needs in regard to BPO outsourcing. Participants ranked a company’s ability to focus on its core competencies as the number one driver in deciding to pursue a BPO outsourcing strategy, ahead of the need to save money, which was ranked most important a year ago.
“Instead of complying with mandates or regulation, leading companies are looking at outsourcing ‘beyond cost reduction’ to unlock the hidden value in the business processes inside their organisation,” said Christopher Carrington, President of Capgemini’s Outsourcing Services in North America. “Given the pressures facing companies, they must take a more holistic and long–term outsourcing approach to realise the significant performance and financial gains outsourcing can provide for their business.”
Consistent with last year’s findings, IT outsourcing continues to be the main service outsourced (38.3%) this year. Human resources (18.7%) and customer care (17.8%) outsourcing followed, compared to last year’s survey results where almost one–third (31%) of respondents were involved in outsourcing a portion of their human resources with one–quarter (24%) already outsourcing part of their finance & accounting (F&A).
The number one reason companies outsource still remains the same as last year, with half of those surveyed believing the ability to offer transformational services in addition to operate capability, to be the most important selection criteria when comparing BPO providers.
Section 404 of the Sarbanes–Oxley corporate accountability legislation still remains a source of concern with finance executives, but according to the survey findings, six out of 10 respondents (60.3%) said that Sarbanes–Oxley regulations have had little to no impact on their decision to outsource their finance and accounting function. Almost half (45.6%) of those surveyed, believe the ability to ensure process controls are implemented and enforced is the most important F&A capability of a BPO service provider.
Other significant pulse survey highlights include:
- One third of participants (33.3%) believe that the greatest internal challenge their company has faced when considering a BPO has been inadequate change management strategy
- The three services forecasted to be the top service functions outsourced in the next year are IT (38.9%), HR (20.8%) and Customer Care (18.1%)
- The top four drivers for a company deciding to use BPO in their corporate strategy, in order of importance, are: focus on core competencies, cost savings; deliver internal value & shareholder value through competitive advantage; drive process visibility, efficiency and integration; and implementation of best practices
Legal issues appear to still be concerning BPO today, with more than a third (35.9%) of participants citing governance procedures as the most important.
The complete survey results can be found here.
About Capgemini
Capgemini, one of the world’s foremost providers of Consulting, Technology and Outsourcing services, has a unique way of working with its clients, which it calls the Collaborative Business Experience. Through commitment to mutual success and the achievement of tangible value, the company helps businesses and governments implement growth and transformation strategies, leverage technology, and thrive through the power of collaboration. Known as Cap Gemini Ernst & Young until April 15, 2004, Capgemini employs approximately 60,000 people worldwide and reported 2003 global revenues of 5.754 billion euros.
Contacts:
John Patterson - Capgemini USA
john.j.patterson@capgemini.com
(917) 934-8735
