Deloitte Report: Outsourcing Programs Hampered By Poor Planning and Narrow Focus on Cost Savings
Source: Deloitte Services LP, Published: 2/14/08, Contact: John La Place
NEW YORK, February 14, 2008 - A new study from Deloitte reports that enterprises entering into outsourcing arrangements are focusing too heavily on reducing costs through labor arbitrage alone, resulting in high levels of disappointment and conflict even though most companies are realizing the cost savings that they had hoped for.
The Deloitte study, "Why Settle for Less: 2008 Outsourcing Report" reported that 83 percent of companies surveyed had achieved an ROI of over 25 percent on their outsourcing projects. However, 49 percent of the executives surveyed indicated they would have defined service levels that aligned better with their companies' business goals if they could start their outsourcing projects over and only 34 percent of respondents reported that they had gained important benefits from their service providers' innovative ideas or transformation of their operations.
In addition, by a 3-to-1 margin, the outsourcing service providers polled reported that their client companies did not have a solid outsourcing plan, lacked the operational data needed to make sound decisions and did not understand how the to-be organization would really work. Such contradictory findings could be the result of a failure to properly define the goals of the outsourcing projects as being more than saving money.