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Home > Business > PTI > Report

Outsourcing: It's not about cost saving alone

August 09, 2007 18:31 IST

Outsourcing is just no more about cost savings but also companies' accessibility to right talent and geographic expansion, a latest survey on business outsourcing revealed.

According to a study by global consulting firm PricewaterhouseCoopers, outsourcing has matured beyond cost reduction to become a way for organisations to better access talent and capabilities, gain more flexibility, reinvent their business model and drive innovation.

It also revealed that gaining access to right talent and geographic expansion were also high on agenda of companies seeking to outsource their various activities.

The study, titled Outsourcing Comes of Age: The Rise of Collaborative Partnering, said outsourcing has come of age with leading customers and service providers shifting their base from traditional to collaborative business models.

"Outsourcing is still very much the game, but the rules have changed," PricewaterhouseCoopers executive director Ambarish Dasgupta said, adding that the lightning pace of growth in outsourcing is only matched by the transformation of the market as traditional models are gradually being replaced by multi-sourcing and joint ventures.

The survey pointed out that customers need to rely increasingly on multi-sourcing, joint ventures and open business models. Unlike traditional single-source transactional outsourcing.

Outsourcing service providers also feel the difference in the needs of their customers goes beyond cost saving to extensive expansion plans as well.

"The one thing that's starting to happen now is that collaboration is increasingly meaning that we help our clients grow and not just help our clients become more profitable," Ashish Gupta, Evalueserve India country head & COO, said.

"A large majority of customers around 87 per cent say todays outsourcing delivers the benefits projected in the original business plan. In fact, outsourcing is perceived as such an essential business practice that 91 per cent of customers, whether completely happy or not, said they will outsource again," the study said.

The study reflects insights garnered from both outsourcing customers and providers representing 19 countries across several continents.

Major areas for the outsourcing industry are, customer call centres, core products and services and logistics or distribution-felt customers in rising markets including Bahrain, Belgium, Brazil, China, Germany, India, Italy, Japan, Kuwait, Mexico, Russia, South Africa, Sweden and the United Arab Emirates.

The customer call centres segment received vote of 56 per cent of respondents, core products and services which got 54 per cent votes and logistics or distribution received 53 percentage of votes.

As per the report, outsourcing is growing fast and delivering results. A high level of collaboration between customers and providers result has increased confidence in overcoming the challenges of outsourcing, broader business model innovation and for expanding investment in key areas of the business.

Companies seeking to improve their business model and performance, while managing the business complexity, are trying to achieve an optimal balance of top-down management and collaborative partnering in dealings with their service providers, Ambarish added.

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