Survey, Companies, ROI, Outsourcing

Survey shows strong ROI for companies that are outsourcing

13 Oct 2006 | (Survey)

Nearly nine out of 10 outsourcing programs pay for themselves, and more than one in four save companies twice as much – or more – as they invest in outsourcing.

That’s one of the key findings from a Capgemini survey of executives attending the IDC Midwest Conference in Chicago this last September. The survey also found that nearly 95 percent of respondents are using the substantial returns generated by outsourcing to improve operational performance, drive innovation, support growth and boost shareholder value.

Reflecting these results, 72 percent of the executives either “agreed” or "strongly agreed" that while outsourcing may not be right for all businesses, every company must at least consider outsourcing in today’s highly competitive, global marketplace.

Designed to capture current views on outsourcing among American executives, the survey found:

• Outsourcing has strong ROI:  Almost 85 percent of the respondents said they have saved at least as much as they’ve spent on outsourcing, with 26.4 percent reporting that their savings were at least twice the size of their investments.
• Investments are significant:  Nearly 60 percent of executives said their companies have spent up to $50 million on outsourcing; another 18 percent said they spent up to $100 million with another 9 percent who said they have spent between $100 million and $200 million.  Fully 9 percent of companies said they have spent more than $500 million on outsourcing.
• Shareholder value improves with outsourcing:  94.8 percent of the surveyed executives said they have used the savings to improve operational performance, drive innovation, support growth and other initiatives that have improved shareholder value.
• America is top choice for outsourcing:  More than 70 percent of the respondents said they either outsource “exclusively” or “mostly” in the U.S.
• Outsourcing has variety of drivers:  Reducing costs, increasing productivity and refocusing resources were the top three drivers of outsourcing decisions identified by the survey respondents.

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