PWC: Companies slow in reaping outsourcing benefits
Price Waterhouse Coopers has released a research showing that in their first year of offshore operations, more than half of outsourcing projects ventured in the finance industry have yet to reap initial cost benefits.
Despite this, there was a doubling in the number of financial service companies intending to offshore jobs over the next three years. Furthermore, more value-added services will be offshored in the near future – such as financial research and modeling. This comes as an even bigger surprise considering other issues from foreign shores – such as staff retention and quality monitoring difficulties.
15% of the respondents indicated that even after five years, still no cost reduction benefits were gained. Since cost savings has been the primary consideration for outsourcing activities, this could prove to be a deterrent to others considering offshoring some of their office functions.
Other statistics presented by the PWC survey:
- 25% have up to 20% of their staff in offshore centers
- 50% expect to follow within the next three years and offshore 10% - 20% of their staff
- nearly 50% have transaction-based IT activities offshore
- 12% have no offshore activities at all
PWC has suggested stepping up career development programs in order to cut losses due to cutthroat competition in the offshoring staffing market. This comes in the light of Gartner’s report on the risks involved with offshoring.
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