Survey claims Outsourcing does not save much for companies

Survey claims Outsourcing does not save much for companies

A survey has suggested that outsourcing of information technology and business services to countries like India saves on an average just around 15 percent. This is little compared to the general belief that outsourcing can save costs by as much as around 60 percent.

Outsourcing advisory firm TPI said in its report that “This research proves that the promise of massive operational savings is unrealistic when you take into account the costs of procurement and ongoing contract management.”

It added: “In our experience, outsourcing arrangements which focus solely on delivering huge savings often fail to meet client expectations.” Reducing costs is one of the primary reasons behind moving jobs off shores to countries where labor charges are low.

However, the survey found that an increasing number of companies are outsourcing primarily to improve quality, at 21 percent now versus 11 percent in 2004.