EQUATERRA PROVIDES “REAL” REALITY CHECK ON TODAY’S OUTSOURCING MARKET IN NEW PERSPECTIVE PAPER

HOUSTON and LONDON (June 12, 2007) — Using large sample sizes, comprehensive analyses and clearly defined survey respondent demographics, EquaTerra found that buyer satisfaction with outsourcing remains positive or above the norm, and that most buyers plan on maintaining or expanding their outsourcing investments.  These findings – based on 11 market studies and 10 Pulse Surveys EquaTerra conducted over the past 10 quarters – are detailed and analyzed in a new EquaTerra perspective paper entitled, “Taking a Reality Check on Today’s Outsourcing Market.”

Relative to outsourcing satisfaction levels, EquaTerra found:

• Out of 200 BPO respondents to a 2005 study, 96 percent were moderately (55 percent) or highly satisfied (41 percent) with their efforts; the same study found that 73 percent of BPO users felt their efforts had enabled process improvement
• 200 buyers across seven BPO categories cited satisfaction levels ranging from 6.5 (call center/CRM) to 7.8 (R&D/pharma) on a one-to-ten scale where one was not satisfied and 10 was very satisfied
• Two studies in 2006, one with 310 respondents and one with 113, assessed satisfaction levels in IT, F&A, HR, procurement and call center outsourcing.  The studies found satisfaction levels from 3.13 to 3.40, with one being not satisfied, to five being very satisfied
• A 2007 survey of satisfaction among multi-process HRO buyers found, on a similar scale of one-to-five, response levels ranging from 2.48 to 3.00

In terms of future outsourcing investment plans, EquaTerra research found that approximately one third of buyers surveyed (out of 673) planned to expand outsourcing usage either in the same currently outsourced functional area, or in new functional areas, geographies, divisions or business units. Less than two percent of respondents indicated that their organizations planned to curtail or eliminate their outsourcing efforts.

While one-off studies by some firms present a doom and gloom picture of the outsourcing industry, the above paints a significantly different picture.

Said Stan Lepeak, Managing Director of Research at EquaTerra, “The main challenge with debating a topic like outsourcing or globalization is that many of the most vociferous parties present findings that appear to be opinion-based rather than fact-based.”  He cited one recent piece of research conducted by another firm that noted 70 percent of employers reported negative experiences with outsourcing, and 44 percent failed to see cost savings materializing as a result of outsourcing – but this was based on a sample size of only 25 companies. Another research study stated that two thirds of outsourcing contracts worth more than £20m were ‘unravelling’ before the end of their contract terms.  But that study failed to describe the profile of those contracts, explain whether they were fully or just partially terminated, or define what unravelling meant in terms of the study.

The “Taking a Reality Check on Today’s Outsourcing Market” perspective paper examines the reality of current outsourcing market trends, and aggregates EquaTerra research on ITO and BPO buyer satisfaction levels and future investment plans. The paper also discusses how organizations should assess current research in the context of their own outsourcing decision-making process, highlights how organizations are becoming more sophisticated in their outsourcing efforts, explores how outsourcing providers are responding to lessons learned from past and current deals, and describes seven key pitfalls to avoid for organizations considering outsourcing. 

To obtain a copy of the paper, please send an e-mail to:  research@equaterra.com.