The International Association of Outsourcing Professionals (IAOP) recently completed a survey that analyzed some of the key issues being faced by organizations in the outsourcing industry.  The study focused on three topics - value capture, capabilities and benchmarking.  IAOP’s findings were surprising.

IAOP’s survey was completed during the first quarter of 2006 and included the participation of 57 companies.  Approximately 50 percent of the responses came from providers, 30 percent from customers and 20 percent from advisors.

Four basic hypotheses were used by researchers, which included the following:

• Value: Researchers have observed that outsourcing arrangements were not delivering value and that many organizations were revising their outsourcing strategies.  Participants of the survey were asked questions regarding their experience with value capture, key measurements used and possible reasons for failures.

• Capabilities: The survey examined the capabilities that companies had in place to support outsourcing deals.  Participants were asked questions regarding senior management support and if any special skills were being developed.

• Benchmarking: Participants in the survey were questioned regarding whether or not they had established a benchmarking program and if so, was the program effective.

• Perspectives: The survey analyzed the different perspectives on value capture, capabilities and benchmarking by including buyers, suppliers and advisors as participants.  The authors of the study were looking to discover if perspectives would differ based on the role of the participant.

After conducting the extensive study, the researchers found that few organizations are generating value from outsourcing on a consistent basis.  However, when it came to the providers’ perspective on value, they were three times more optimistic in stating their companies generated value from outsourcing, as compared to the customers’ point of view.

When participants were asked why outsourcing relationships fail, some of the reasons given were unrealistic expectations, lack of outsourcing strategy and too many requirement changes.  According to participants in the survey, providers are doing a poor job on setting expectations in their outsourcing relationships.  It was also found that customers need to place more emphasis on change management during the implementation process.  In addition, a better focus needs to be made on an upfront strategy and change management strategy, which can be accomplished through the help of a global sourcing strategist.

If your company is considering IT outsourcing, contact the global sourcing strategists at A&E Consulting at 661-200-3612.  We can help you choose the right outsourcing location and partner.  It is our goal to provide each client with a personalized solution that minimizes the time of implementation and maximizes the return on investment.

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