KPMG Global Survey on outsoursing
number of businesses around the world are unable to quantify accurately the
benefits which their outsourcing arrangements bring in for them, claims a KPMG
International survey. However, companies do acknowledge the positive role played
by their respective sourcing providers in the overall organisational success.
Companies are now increasingly looking towards sourcing to
provide tangible business benefits. The evolution of sourcing has created immense
advantages for businesses that deploy and manage them effectively. KPMG International
survey examines the global sourcing marketplace focusing on the current trends
in the design, development and management of sourcing initiatives.
Commenting on the survey findings, Egidio Zarrella, Global
Partner in Charge, IT Advisory, KPMG, said: Personally, Im glad
to hear that businesses feel that their sourcing arrangements are working as
it was all too easy in outsourcings formative years to dismiss it as something
which was never properly delivered. However, businesses have to be able to substantiate
the benefits which outsourcing delivers. Simply going on a gut feel or anecdotal
evidence is not enough.
He added that Significant opportunities do exist for
organisations to capitalise on the strategic value of outsourcing. This potential
can be unlocked by a more consistent measurement of contract provisions and
other metrics about the relationship with the service provider.
- 42 percent of organisations believe their
sourcing contract has definitely improved financial performance
- 27 percent said it has definitely improved
- 72 percent of customers reported that
they do not have, or share with their service providers, criteria for
measuring the success or failure of their sourcing arrangement.
- As many as 59 percent of organisations
interviewed either tracked benefits for IT projects at an elementary
level, or did not track benefits at all
- 79 percent of respondents did not accurately
know the costs of selecting a service provider
- 14 percent of respondents said they had
a significant misalignment of financial and commercial expectations
with their service provider
Despite the fact that outsourcing is now a widely accepted
business practice, KPMG survey brings to light some problems which companies
claim to be suffering from regarding their outsourcing arrangements. 42 percent
of outsourcing arrangements are not supported by a formal strategic measurement
framework. Almost 2/3rd of the respondents interviewed either tracked benefits
at an elementary level or did not track benefits at all. 72 percent of the customers
reported that they do not have the benchmark for measuring the success or failure
of their sourcing arrangements.
Speaking on the occasion of the survey release in India,
Pradeep Udhas, Global Partner in Charge, Sourcing Advisory, KPMG said Sourcing
is as important as selling for organisations, as it not only impacts profitability,
but also makes it much more nimble in todays dynamic environment.
He further added that The report is intended to help organisations leverage
the experiences of top management who are at the epicenter of major outsourcing
initiatives, in order to gain valuable insights into how to manage successful