The recent research published by Vanson Bourne and Patni Computer Systems which claims that outsourcing confidence remains high has to raise a few eyebrows. While that specific question may have been asked of this sample, the other statistics within the research reveal that an entirely different, and concerning, conclusion is possible, if not more likely.
If 40 percent of respondents are planning to outsource more, which it cannot be denied is reassuring, then 60 percent are either outsourcing the same amount or even less, which surely cannot support the conclusion that confidence in outsourcing remains high.
Indeed, if you consider some other recent research undertaken by Harvey Nash and PA Consulting, polling almost 1500 CIOs across Europe, it appears that confidence is if anything waning as outsourcing spend is being cut by 24 percent, almost double the 13 percent of last year. Additionally, dissatisfaction with offshore outsourcing has grown from 62 percent to 66 percent.
Therefore, the conclusions drawn from this research can be considered to be misleading at best, and hide some important and potentially rather worrying trends – ones that both sides of the outsourcing community cannot afford to miss. “Lies, damned lies and statistics” after all!
Perhaps a more apt conclusion, drawing from both sets of research, is that the jury is still out over whether confidence remains high within outsourcing. Outsourcing has become something of a standard modus operandi for UK business, but given the recession, in order for this to remain a safe course of action, there are a number of areas which both clients and suppliers have to not only concentrate upon, but actively co-operate over.
For instance, we have seen many examples within the last year alone of good outsourcing strategy being implemented with either a single outsourced provider, or a well-managed multi-sourcing programme. However, we have seen at least an equal number of horror stories with massive over-dependence on one supplier, or an entirely uncoordinated multi-sourcing policy, and on many occasions, it has been caused by lack of resource, time and effort being dedicated to managing the relationships.
We are also all aware of national political pressures to bring jobs back into the country, rather than offshoring, meaning that those who do offer an offshore service must prove that they will actively pursue adding business value. Therefore, there is a real need for the development of more equitable commercial models – a move away from a negotiation of manpower levels being provided, to instead ensuring that the contract signed generates business value for both sides, especially through innovation, and that the commercial terms are output not input-based.
Similarly, governance on both sides of many outsourcing relationships has to be improved. Huge numbers of companies are terrifyingly unaware of how much an outsourced arrangement actually costs, or do not fully understand what the end goal of the arrangement is – a state of affairs that cannot be tolerated in good economical times, let alone now.
Sourcing cannot afford to be left as business as usual – it must be about adding business value, and if outsourcing clients and suppliers are confident that this is the case in their outsourcing relationships, I would be very surprised.