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Cost Reduction still Primary Reason for Outsourcing

by: Sarah Joson

Wednesday, February 13, 2013 | Outsourcing News |

A study done by HfS Research indicates that cutting costs is the main priority of businesses for outsourcing. Other factors identified were revision of old processes and innovation.

Forty-three percent of those who participated in the study pointed out that they outsource to cut cost and that it is in fact critical for their operations. Forty-four percent said they outsource but their decision is not highly driven by cost reduction.

Meanwhile, 37 percent of IT buyers outsource as it enables them to have more flexibility. Thirty-four percent said they outsource to improve their regulations and policies, and 22 to 24 percent said they outsource to tap skilled candidates and new technology.

The study also shows the sentiments of buyers, saying that their weakness is formulating external benchmarks and having industry insights and that they particularly do well in contract negotiations.

Moreover, existing contracts are evolving to make way for niche skills, new technology, and innovative services.
Meanwhile, it was seen that more and more buyers outsource to drive innovation and improve analytics. Some buyers revealed that they are planning to change providers within the next two years. Moreover, 19 percent want to change contact center providers and 13 percent said they would change their IT infrastructure.


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