The Outsourcing Edge

It's not just for cost-cutting any more

Contrary to popular belief, outsourcing isn't just a way for corporations to secure the same work at a lower wage. A new study by Accenture finds that companies are using outsourcing not just to cut costs but also to gain strategic advantage. Managers say the practice of outsourcing gives them greater control in planning, reliability, and speed of change.

"Industry leaders are beginning to view outsourcing as a prescription for change, versus an antidote to rising costs," says John Rollins, a partner in Accenture's products operating group. Forward thinking managers are starting to look at outsourcing as a way to generate value, not just fix a squeezed budget, he says. "The 30 percent of respondents who measure outsourcing's impact on such business outcomes as shareholder value and revenues are on the leading edge. These outcomes are the true barometers of outsourcing's value."

Other findings:

* Outsourcing has expanded. While companies have long outsourced IT functions, more and more are starting to outsource processes such as supply chain management, training, human resources, and finance and accounting.

* Outsourcing gives back. Almost three quarters of respondents said they would redistribute the cost benefits of outsourcing to either the bottom line or growth efforts.

* Outsourcing has many measurements. Most retail executives said they measure the success of their outsourcing agreement by calculating business outcomes. Health and life sciences executives are more likely to measure service levels.

* Outsourcing is here to stay. More than 80 percent say they are committed to outsourcing at least one business function permanently. Only 14 percent say they plan to use outsourcing on a temporary basis to rehabilitate key functions and return them in-house once efficiencies are realized. ________________________________________________________________

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