Monday, May 29, 2006

Study Finds Direct Correlation Between Satisfaction and Investment In Outsourcing Management

According to a study by EquaTerra, there is a direct relation between a satisfactory outsourcing agreement and that of investments made in Outsourcing Management and Governance (OM/G).
The conclusion was based on a survey of 250 IT and BPO decision makers by the US-based outsourcing advisory firm. The firm advises a four to seven percent range in terms of the total value of contract as the optimum level of expenditure on OM/G to ensure maximum satisfaction on outsourcing deals. Executives outsourcing for process improvement than cost-savings are also expected achieve higher satisfaction levels. High-Tech Products and Services, Pharmaceuticals and Automotive/Manufacturing experienced the most satisfying results in terms industries while IT and CRM were the best verticals due to matured process.

The survey also finds that outsourcing satisfaction improves over time (respondents whose engagements had been in place more than two years were consistently more satisfied); IT and CRM executives cited the highest satisfaction levels.
While satisfaction was greatest for companies that spend 4%-7% on OM/G, over 48% of respondents spend between 1%-4%. Interestingly, HR executives were the least satisfied at this 1%-4% spend-level.

The study also indicates that organizations were using a wide range of software tools to support their outsourcing efforts. There was no clear consensus on which software applications or class of software vendors has the most compelling OM/G tools.

However, organizations clearly identified that value for the money and ease of use are the key desired functional attributes of a quality OM/G tool, and that providing timely, relevant and actionable data was the more important deliverable from an OM/G tool.

Source: Global Services, EquaTerra

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