"Outsourcing is rapidly becoming an accepted management tool for redefining and reenergizing the corporation. It challenges today's executives to rethink the traditional, vertically integrated firm in favor of a more flexible organization structured around core competencies and long-term, outside relationships."
- The Outsourcing Institute

 

 

 

 

 

“Companies around the world have realized that to remain ahead, they need to reduce costs, provide the best quality, use the latest high-tech skills, and most importantly, be reliable and innovative,”
- Nandan Nilekani, Deputy Managing Director Infosys Technologies Ltd.

 

 

 

 

 

  
Management trends in outsourcing
  • Harvard Business Review has identified outsourcing as one of the most important management ideas and practices of the past 75 years.
     
  • Spending by U.S. organizations on outsourced business services will triple from $100 billion to $318 billion.
     
  • Studies indicate that outsourcing is increasingly viewed positively by executives and top management alike, at both US and multinational companies.

Empowering Executives to Outsource


Michael F. Corbett & Associates, Ltd. conducted research this year with more than 500 executives and found that:

  • One in four organizations plan to increase their outsourcing spending by 25% or more.
  • Outsourcing will represent 19.5% of the typical executive's budget, up from 16.4% today.
  • Firms in dynamic markets such as telecommunications, high-tech products, and professional services, already source more than 40% of their operations outside.
  • Innovation is now seen as the key strategic benefit of outsourcing.

Top US Companies Turning to Business Process Outsourcing

Top US companies are turning to business process outsourcing, according to a study released by PricewaterhouseCoopers, based on interviews with senior executives at more than 100 U.S. companies averaging about $4.4 billion in yearly revenue.

About 73 percent of U.S. executives interviewed said their companies presently outsource one or more business processes to external service providers.

The Outsourcing Edge

Executives said:

  • BPO (Business Process Outsourcing) lets companies focus on core competencies to increase efficiency without having to invest in people and technology.
  • It also helps companies become more profitable and leads to better service levels than internal departments can provide.
  • A majority of the polled executives said BPO helps a company maintain a competitive edge. (read more at Informationweek.com)

Top decision-makers at 300 multinationals in 14 countries enthusiastic about BPO

The PricewaterhouseCoopers Global Top Decision-Makers StudySM is a landmark study — the first to focus exclusively on BPO at billion-dollar multinationals. Conducted by Yankelovich Partners for PricewaterhouseCoopers, the study provides an in-depth report of the attitudes and behavior of senior executives and their companies toward BPO in general, and Finance & Accounting Services (F&A Services) specifically.

Interviews were conducted with 304 top decision-making executives in 14 countries: CEOs, Presidents, CFOs, COOs and CIOs. Among this group, 192 companies ( 63%) report outsourcing one or more business processes. And, of these companies ( 41% ) report outsourcing Finance & Accounting Services which includes General F&A, Internal Audit, and Tax Compliance.

Over 300 companies participated in the study — covering the Americas, Europe, Asia Pacific, and South America.

Findings of the Study

The findings of the study reflect an increasing interest in, and usage of, Business Process Outsourcing as a strategic initiative.

Business Processes
Currently Outsourcing
Best Candidate for BPO
(All Companies)
Human Resources
42%
59%
Finance and Accounting
41%
70%
Payroll
37%
70%
Real Estate
32%
65%
Procurement
15%
33%

Top executives are increasingly recognizing the need to manage their company's growth with less infrastructure. Thus, they are considering outsourcing processes that are essential, but not core to the growth of their business, including Finance & Accounting functions.

Attitudes towards BPO
Companies Outsourcing Finance and Accounting
All Companies
BPO allows companies to focus on core competencies
94%
86%
BPO allows companies greater efficiencies without having to invest in people and technology
85%
76%
BPO helps companies become more profitable, leading to increase in shareholder value
77%
66%
BPO will lead to better service levels than intenal service departments can provide
63%
48%


 

Satisfaction with BPO
Companies Outsourcing Finance and Accounting
All Outsourcers
Satisfied
84%
84%
Dissatisfied
13%
10%

More than 8 out of 10 executives (84%) outsourcing Finance and Accounting services are satisfied with their initiatives. One third of these executives report that BPO initiatives are in their company's current business plans.
 

Top 3 Strategic
Benefits of BPO
Companies Outsourcing Finance and Accounting
All Companies
Maintain competitive edge
80%
67%
Focus on company's core business
79%
75%
Improve service quality
77%
70%

In summary, the Yankelovich research suggests that the bottom-line benefits of BPO are beginning to be recognized and appreciated. Forward thinking CEOs and CFOs are increasingly utilizing BPO as a new strategic tool to improve their competitive stance, their profitability and ultimately, helping to build shareholder value.

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