Businesses “flounder in the dark” over outsourcing value

More than four in 10 businesses are unable to quantify the benefits of their outsourcing deals, new research from KPMG International shows.

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More than four in 10 businesses are unable to quantify the benefits of their outsourcing deals, new research from KPMG International shows.

A KPMG survey of chief information officers and senior executives at more than 650 major enterprises worldwide found that 42% of their outsourcing arrangements were not supported by a formal strategic measurement framework.

Nearly four out of five respondents admitted they did not accurately know the cost of selecting their outsourcing providers.

The overall sentiment of the companies surveyed was that they were generally happy with their outsourcing arrangements. But three-fifths of respondents said problems with their outsourcing providers were almost always people-related – a finding KPMG said could be explained by the fact that people and cultural fit were considered as secondary issues – if at all – during the selection process.

Egidio Zarrella, KPMG’s global head of IT said: "Personally, I'm glad to hear that businesses feel that their sourcing arrangements are working as it was all too easy in outsourcing’s formative years to dismiss it as something which 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."

Zarrella added: "Significant opportunities do exist for organisations to capitalise on the strategic value of outsourcing. This potential can be unlocked by a more consistent measurements of contract provisions and other metrics about the relationship with the service provider.

“Sadly, our survey shows that far too many businesses do not appear to have these processes in place, leaving them floundering in the dark somewhat when trying to establish the real value of outsourcing arrangements to their bottom line."

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