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Capgemini survey on shared services vs. outsourcing presented at joint Conference Board / SBPOA event in Chicago

19 Nov 2004 | (Survey)

As businesses move beyond cost reduction and toward a growth agenda in 2004, Capgemini US LLC, a global leader in consulting, technology and outsourcing, found that senior executive support and buy-in are the most critical success factors in rallying support as well as overcoming resistance to shared services or outsourcing transformation programs. According to a Capgemini survey of the more than 100 finance & technology executives attending Conference Board Shared Services Conference, two-thirds of respondents (67.3%) believe executive support is essential to delivering world-class services through a shared services approach.

While there is little consensus on the dominant service delivery model today (42% for shared services vs. 28% for portfolio-based combination of outsourcing and insourcing), the survey found that success of any model hinges on the leadership of the executive team in overcoming resistance to change. Service level agreements, contract management and financial management are not enough to ensure success; rather, a slight majority (51.9%) respondents believe that a proper governance model is imperative with either solution. Surprisingly, one-third (34.8%) of respondents said they have already outsourced their HR function, compared to four in ten (39.1%) who decided to outsource a portion of their information technology.

"The pulse survey confirms that companies are still deciding on their dominant service delivery model between shared services, outsourcing and a portfolio-based approach that combines the best of both worlds," said Terry Jost, Vice President and Outsourcing Leader for North America at Capgemini. "Having a solid business case to drive sustained value through sophisticated sourcing is imperative, but companies must also embrace change management in order to make their sourcing model a value creator, not a stranded asset."

The Conference Board Shared Services conference entitled "Getting the Best From Shared Services: Evolution through Outsourcing, Offshoring and Technology" focused on discovering the reality behind the headlines and the hype on offshoring and outsourcing. In collaboration with the Shared Services and Business Process Outsourcing Association (SBPOA) and presented by Capgemini and EquaTerra, the Conference Board Shared Services conference featured keynotes and case study presentations from Hewlett-Packard, General Mills, US Cellular, Capgemini Energy, META Group, Deutsche Bank, FleetBoston Financial Corporation and Siemens Corporation.

Other survey highlights include:

-- 42.3% of respondents were from "product" industries (energy, automotive, retail, manufacturing), 13.5% were from "service industries" (telecom, media, facilities), and 11.5% hailed from healthlife sciences and financial services respectively.

-- The top three challenges to making a global shared services approach work in the real world from a technology perspective were managing ERP systems (34.6%), knowledge management (28.8%) and workflow and imaging tools (28.8%)

-- Nearly two in three respondents (64.2%) said labor arbitrage was the most important savings lever to use an offshore outsourcing provider, while only 13.5% pointed to business process improvements as the prime savings lever.

-- Six in ten (62%) said the current US political and regulatory debate over offshore outsourcing has had no impact on their company's long-term interest in offshore outsourcing.

Survey responses may not add up to 100% due to multiple responses.

For complete survey results, visit www.us.capgemini.com.

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