Cost 'not the only offshoring factor'

16 October 2005
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17 October 2005 | Anusha Bradley at the CIPS Premier Conference in London

Outsourcing to low-cost countries just on a cost basis is a mistake, warned BT Group chief procurement officer Meryl Bushell.

Addressing attendees of her seminar, 'Sourcing from low-cost economies - the myths and realities', Bushell said it was not only price but expertise that led them to send work abroad.

"I don't think we have all the IT skills we needed in the UK. If we did not have access [to low-cost countries] we would not be able to remain competitive." Bushell said the company had saved between 40 and 60 per cent by outsourcing 90 per cent of its IT spend to India in the past two years. She insisted it did not outsource just to save money, adding that such a policy was not sustainable.

"All outsourcing myths are driven by companies who just look at cost-cutting. Wage inflation exists in India and over a period of time, the cost reduction advantage will disappear."

However, Hamish Pringle, director general of the Institute of Practitioners in Advertising, said procurement staff often had more tenure than a chief executive or marketing officer, and could offer the continuity needed to assess risks to a firm's reputation and outsourced call centres.

SMoct2005

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