Buyers find transition to outsourcing a challenge

4 November 2011

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4 November 2011 | Angeline Albert

Buyers are struggling to make the transition to outsourcing a success, according to KPMG’s 3Q11 Sourcing Advisory Pulse survey.

The study quizzed shared services and outsourcing advisers from more than 20 companies including KPMG, Accenture and BT Global Services who work for client firms. They reported that buyers are showing renewed interest in shared services as a means to complement or supplant traditional outsourcing. 

Disappointment with under-achieving outsourcing efforts, changing economics and a desire for greater control over strategic processes and sensitive data were cited as reasons. The report said purchasers continue to face challenges in managing outsourcing transition processes and their efforts are hampered by a lack of skilled resources and inadequate planning and procedures. This leads to transition efforts not being completed on time, within budget or to the required functionality, it said. “This too often means that poorly handled initial transition efforts negatively affect the start of the relationship between the client and the service provider.”

Interest and adoption levels for shared services, however, has risen during the past two years – in part due to disappointing outsourcing efforts and a wish to avoid overly aggressive outsourcing. The report said buyers are having moderate success in achieving the goals sought from shared services efforts, with cost savings cited as the chief aim.

It said many organisations achieve short-term success from quick wins - such as the one-time cost savings achieved by moving work offshore or consolidating IT operations - but then struggle to continually improve operations and drive down costs.

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