Big boys turn backs on offshoring

Many of the world's largest organisations are turning their backs on outsourcing and one in four are actively bringing services back in-house.
A survey from Deloitte Consulting reveals that 70 per cent of respondents have had significant negative experiences with outsourced projects. Just under half, 44 per cent, did not see outsourcing contracts achieving significant cost savings.
In fact 57 per cent of respondents said they had had to pay for services they believed were included in the cost of the original contract. Almost half of those questioned said hidden costs were the most common problem with outsourced contracts. As a result of these disappointments more than half of those surveyed have moved from long-term contracts (of about ten years) to shorter contracts of less than five years.
Ken Landis, senior strategy prinicipal at Deloitte, said the survey revealed the fundamental difference between outsourcing the making of a product and outsourcing an actual service that has to be delivered every day. Firms found that outsourcing contracts can add complexity and increase the burden and workload for managment.
The survey was carried out using face-to-face interviews with senior executives representing 25 big companies - nearly half are within the Fortune500, a quarter are privately held or public sector bodies. The average participant had annual turnover of $50bn.

70% of Indian business process outsourcing companies to die within the next few months

70% of Indian business process outsourcing companies to die within the next few months by ZDNet's IT Facts -- 70% of the top 15 Indian business process outsourcing start-ups will cease to exist in the coming months, Gartner said. Offshoring customer service will not be as widespread as expected. In 2005, it is expected to be less than 2% of the total and will grow only to less than 5% in 2007. Through 2007, 80% of organisations that outsource customer service and support contact centres with the primary goal of reducing cost will fail.

Outsourcing, Offshoring, Exporting U.S. Jobs - Who’s Most Likely to Do It? Who’s Most Likely to Succeed or Fail?

Key findings include:
· Large companies use offshore services 2.4 times more often than small companies and are more likely than small companies to use more offshore services in the future.
· Top users of offshore services, by industry:
· Communications (34.5% of these companies say they use offshore
services)
· Information Technology (33.8%)
· Financial Services (25.7%)
· Retail-Wholesale (22.9%)
· "Health and Education" and "Public Administration" report that they're increasingly disinclined to use offshore services. In the case of Public Administration, i.e. Government, the disinclination to go offshore may reflect recent political backlash and significant dissatisfaction reported with past use of offshore services.

“Lou Dobbs, Carly Fiorina, Gregory Mankiw—whomever’s side you’re on, this special report sheds new light on the controversial issue of offshore services,” said Kelly Gay, chairman, president & CEO of KnowledgeStorm. “In the midst of heated debate and rising backlash over this trend, quantitative facts and analysis are hard to come by. ‘Corporate IT Spending and Offshore Services’ reveals the trends, profiles and numbers behind outsourcing that may affect your job, your company and your customers.”

NOTE TO EDITOR: http://KnowledgeStormResearch.com/
The full report on “Corporate IT Spending and Offshore Services” is available complimentary for credentialed members of the media. ($1,500 for non-press). In addition to more detailed data and charts, the full report includes complete segmentation analysis by industry and company size.

More findings from the full report:
· 23.6% of companies surveyed report using offshore services.
· Use of offshore services varies widely by industry, from a low of 9% to a high of
· over 34%.
· The marketplace is polarized -- not all companies are eager to use offshore services:
· 42% of respondents indicate that they're less open to using offshore services in the future.
· 57.8% of users of offshore services are satisfied with them.
· There's a strong positive correlation between satisfaction and increasing likelihood to use offshore services. Therefore, expect use of offshore services to continue to grow because of this base of satisfied and eager customers.