Firms not considering in-house risks, says survey

05 Nov 2003 | (Survey)

The research of 110 companies in six countries – Australia, Belgium, France, Germany, the Netherlands and the UK – found the perception of risk associated with outsourcing is greatest in the UK.

Bob Fawthrop, managing director of the international outsourcing business at LogicaCMG, said that while the in-house option may be less risky companies are not aware of the potential problems.

"Some of the people are not even considering the risk involved with keeping it internal. They are only looking at the risks of outsourcing it," he said.

In the case of a major enterprise resource planning rollout, for example, issues such as data conversion from legacy systems to new systems and the retention and training of staff make the in-house option a "massive risk", according to Fawthrop. "It is lower risk to go with an experienced SAP outsourcer than to do it in-house," he said.

IT outsourcing is still more common than other areas such as finance and payroll but the survey found that because of the perceived risks involved, organisations aim to cap their outsourcing activity to 18 per cent of systems and processes.

Cost reduction also remains the main driver behind outsourcing according to 82 per cent of respondents, ahead of factors such as improved business performance and service delivery.

Fawthrop said the research is not yet complete and that there will be further analysis to come out early next year on figures comparing actual cost savings of outsourcing against in-house.

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