Outsourcing, Business, Offshore, Center, Companies, Contact, Satisfied

New study finds companies are satisfied with offshore outsourcing of IT, business process and contact center services

05 Feb 2004 | (Survey)

Despite the challenges of moving IT, business process and contact center services to India, China and other overseas locations, companies are satisfied with their offshore outsourcing initiatives, according to new research findings by the Weissman Center for International Business at Baruch College and The Paaras Group.

The joint study was based on comprehensive surveys and in-depth interviews with 38 global companies, mostly based in North America.

The Managing Change in Offshoring - 2003 Offshoring Survey found that momentum for offshoring is continuing unabated, especially as companies gain confidence and experience in their ability to manage offshore operations. The survey also found that offshoring delivered significant benefits to pioneers as well as newcomers in 2003, with companies able to improve quality while cutting costs.

"Despite protectionist backlash in the US and Europe, the offshoring wave has turned into a Tsunami - an inevitable outcome of globalization and economic integration," said Suresh Gupta, Managing Partner, The Paaras Group. "In fact, the leaders in offshoring are no longer focused solely on offshore opportunities. They have graduated to a broader model of 'global' or 'smart' sourcing, which combines multi-location, multi-vendor and both in-house as well as outsourced solutions for IT and business processing."

Key findings from the 2003 offshore outsourcing survey include:

-- Satisfaction Levels are High - The vast majority of companies (89%) moving IT, business processes and contact center work offshore reported that they are satisfied with their offshoring initiatives.

-- But It's Not Easy - Knowledge transfer (76%) and internal commitment (76%) were identified as the major challenges in launching offshore initiatives, which companies said need to be addressed early on to ensure success. Many of the survey participants recommended hiring outside services providers to help build consensus and bring 'best practice' experience.

-- Cost Isn't the Only Driver - Companies cited cost savings (94%) as the main goal of offshoring in 2003, followed by accessing skilled resources (63%) and improving quality (51%).

-- Program and Change Management are Keys to Success - Most of the companies surveyed (85%) believe that the establishment of a Program Management Office (PMO) provides the foundation for offshoring success, with two-thirds (67%) stressing the importance of proactive communications programs.

-- 'Best Practice' Companies Prefer Global Sourcing to Offshoring - Companies with significant outsourcing experience have moved or are moving toward a strategy of multiple locations, multiple vendors and a judicious blend of both in-sourced and outsourced models to minimize risks and maximize flexibility.

Lilach Nachum, Associate Professor of International Business at Baruch College, said, "Our findings confirm the North American business community's growing commitment to offshoring, with most of the companies we interviewed planning to step up their level of activity. As this trend continues, companies will be in a much stronger position to focus on and invest in new growth opportunities. We expect to see more jobs created that call for a higher level of skills and innovative capabilities as a result."

The Weissman Center- Paaras Group report also identified best practices in offshoring, examining how companies are making offshoring decisions, reducing the risks of managing offshore operations and planning to handle potentially explosive issues such as job displacement, community relations and employee re-training.

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