Deloitte: Execs lukewarm on outsourcing

A new study from Deloitte finds that CIOs and other IT executives are lukewarm about outsourcing. The study, Why Settle for Less, found that only 34 percent of respondents reported that they had gained important benefits from their service providers' innovative ideas or the transformation of their operations. At the same time, the study found that 83 percent of companies surveyed had achieved more than 25 percent ROI on their outsourcing projects.

Does this mean that IT executives are willing to continue outsourcing projects? Hard to say, according to Deloitte. The report found that many outsourcing deals are focusing too heavily on reducing costs through labor alone. That does not take into account other issues, such as quality, that may be as important as the bottom line.

"Outsourcing is working financially for a majority of companies in this survey, however, executives' propensity to lead with cost reduction and labor arbitrage without emphasizing the need for overall optimization stymies their companies' chances to realize the full benefits of outsourcing," said Peter Lowes, a principal with Deloitte Consulting LLP and the leader of its Outsourcing Advisory Services group, in a statement. "The themes of unrealized potential and lost opportunities to use outsourcing as an opportunity to innovate echo throughout this report," he said.

What's missing from most of these companies is a chance for using outsourcing to drive greater innovation. And that might result from companies setting their outsourcing goals too low, according to Lowes. The international survey included more than 300 senior executives at mid-size and large companies from the United States, the United Kingdom, Germany and Canada.

For more on the Deliotte survey:
- See this CIOUpdate article [1]

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