Thursday, July 21, 2005

A Comprehensive Survey of Offshore Outsourcing

From: tmcnet

It’s no secret that offshore outsourcing is a hot topic now.
A recently released report issued by research and consulting firm Ventoro does an excellent job of cutting through the miasma. The company’s 2005 Offshore Outsourcing Report is the result of a survey of more than 5,231 executives in North America and Europe who were considered prime buyers of outsourced services originating from offshore (3,139 in the U.S.).Currently, only 19 percent of all companies in the U.S. and Europe are engaging in offshore outsourcing, a number much lower than the public’s perception. However, when looking at the Fortune 1000, this number jumps to a rather staggering 95 percent. Some notable findings from the study:
• Offshore outsourcing ventures seldom fail because of a single factor; more often than not it’s a combination of issues.
• Of those companies with existing offshore strategies, 72 percent planned to increase their spending on offshore. Only 10 percent of companies were planning to decrease their spending.
• For companies that chose not to move business offshore, they indicated it was primarily because of perceived security issues and quality.
• Aggregate estimates of cost savings realized because of the offshore model were calculated between 10 and 19 percent, depending on different factors. These numbers are significantly lower than the numbers that had been expected by the organizations following offshore strategies.
• The report indicates that when offshore outsourcing is done properly, a realistic cost savings rate of about 30 percent is a reasonable expectation.

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