A recent Computer Sciences Corporation (CSC) Research and Advisory Services survey of European corporate management indicates that strategic outsourcing will continue to grow in importance as a business tool. It shows that executives are paying far more attention to long-term business goals and believe business and IT transformation will become more important to them in the next three years.
Strategic outsourcing is best defined as an outsourcing arrangement that will have a significant impact on business results and on how these results are delivered.
The results of the research indicate that companies want outsourcing to achieve six business goals: improved company focus, improved service delivery, reducing and controlling costs, converting fixed to variable costs, freeing resources for other purposes and deploying standard solutions.
Within the strategic outsourcing engagement, the most important objective corporations look for is cost reduction and control. This was clearly the main reason behind decisions to outsource five years ago, according to survey results. It is even more important today, and is likely to remain the dominant objective to be achieved by outsourcing during the next three years.
There is no apparent connection between explicit approaches to strategic outsourcing work and satisfaction with the results.
Piet Opperman, Head of CSC Research and Advisory
While most of those who have engaged in strategic outsourcing are happy with the service they received from their service providers in deploying standard solutions and improving service delivery, there were concerns about service providers` ability to enable business transformation to improve business and IT flexibility.
Companies want to take advantage of technology without necessarily investing capital in new hardware and software, and therefore they seek alliances from partners who can leverage global supplier agreements and share skilled resources.
They also want strategic outsourcing providers to help them achieve flexibility and transformation in both business and IT. This is why companies want to choose multiple best-of-breed strategic outsourcing vendors and manage the project themselves. But they`re not paying close enough heed to the cost of managing many vendors in such an outsourcing model.
This finding reflects the emergence of newer outsourcing models based on consortia and alliances that provide access to specialist suppliers through a single point of contact. These have become more visible in the past two years and provide the benefits of the best-of-breed model with the ease of management of using a single supplier.
Successful outsourcing contracts will be those based on consortia and alliances that provide, through a prime contracting partner, access to leading service providers. And that prime outsourcing partner must be skilled and experienced in managing complex assignments.
The research also found that satisfaction with the results of strategic outsourcing efforts is not linked to the effort put into the selection of outsourcing providers or their management. This suggests that companies are concentrating more on supplier selection than on proactively managing the outsourcing initiative.
This is cause for concern because, if executives expect the competitive environment to get tougher during the next three years, they will need to ensure their strategic outsourcing efforts deliver the needed results.
There is also no apparent connection between explicit approaches to strategic outsourcing work and satisfaction with the results. This may be because approaches that have been developed are not uniformly applied across a company`s strategic outsourcing work.
Relentless global pressure and the constant need to change the way business operates means that companies can never become complacent. To meet the challenges of the future they will come to realise the importance of strategic outsourcing - not just for survival - but to give them the edge in achieving business results.
* CSC sponsors ITWeb`s outsourcing industry portal. With IT skills shortages increasing and companies being forced to focus on their core competencies, the outsourcing of IT solutions, systems and infrastructure remains common. This resource outlines everything companies need to watch out for when relying on a third-party to manage and maintain some or all of their IT requirements.
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