Two-fifths of firms worldwide back outsourcing

Will Green is news editor of Supply Management
27 May 2014

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27 May 2014 | Will Green

Two in five firms globally have outsourced a function or plan to, according to a survey.

Grant Thornton’s report Outsourcing: driving efficiency and growth revealed tax services is the function most likely to be outsourced, with 49 per cent of respondents doing so, followed by IT services (46 per cent) and HR-payroll (36 per cent).

The study showed a desire to increase efficiency was the biggest driver to outsource (57 per cent), with cutting costs close behind (55 per cent).

Among the three-fifths of businesses with no plans to outsource, the major reason was “unwillingness to lose control of a key process”, cited by 44 per cent of respondents, followed by “the high cost of implementation” (32 per cent).

Samantha George, head of outsourcing at Grant Thornton UK, said: "The results suggest that the use of outsourcing providers in the mid-market is well-entrenched across the globe. Outsourced solutions now exist for a considerable number of service lines, and providers have become expert at tailoring solutions to the individual needs of their clients. This is positive news: outsourcing can free up resources tied into back-office processes and put them into higher value-add functions, helping to drive business growth.

"Of course, the results also show there is room for further penetration in the market by engaging with the three-fifths of businesses which are not currently considering outsourcing. The results highlighted the popular misconception that outsourcing a process means losing control, whereas, in fact, it can help senior leaders at dynamic companies take a step back and gain a clearer picture of how the business is performing against its strategy. This suggests the industry has a challenging, but eminently achievable, marketing task on its hands."

The survey, involving around 3,300 senior executives around the world, showed Latin America was the region most likely to outsource (51 per cent) and South East Asia was the least likely (26 per cent). In the European Union the figure was 36 per cent.

 

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