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Emerging Trends in On-shore and Off-shore Outsourcing

  • ID: 39625
  • January 2003
  • InterUnity Group
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Outsourcing is undergoing a radical transformation. Transparent geography is one of the many emerging trends. Dramatic benefits such as cost savings and time to market reductions have been reported by its pioneers.

This report identifies major outsourcing strategies in use today and is designed to help companies determine the appropriate outsourcing strategy, and how to avoid the potential pitfalls.

Selected Findings

The InterUnity Group/Computerworld Outsourcing research report ("Emerging Trends: On-shore and Off-shore Outsourcing) demonstrates a clear link between outsourcing and market leaders, as defined by corporate financial performance, including revenue size, revenue growth, profitability and market share. While cost saving is a primary driver of outsourcing, companies benefit in other ways, including freeing up internal resources and accessing world- class skills and capabilities.

Methodology

The outsourcing report data was collected during April and May of 2003 utilizing an extensive online survey. More than 250 senior corporate and IT managers from mid-sized and Fortune 500 companies across 21 industries completed the questionnaire.

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I. Executive Summary 6<BR><BR>II. Methodology 11<BR><BR>III. State of Outsourcing 12<BR>a. Introduction 12<BR>b. Company Profile 12<BR>c. What is Outsourced and Why? 16<BR><BR>IV. Comparisons 18<BR>a. Outsourcing Compared to No Outsourcing 18<BR>b. Outsourcing to US Only Compared to Off-shore Only 21<BR>V. Fastest Growing Companies 25<BR>a. Introduction 25<BR>b. What is Outsourced and Why? 25<BR>c. Outsource Partner 27<BR><BR>VI. Most Profitable Companies 29<BR>a. Introduction 29<BR>b. What is Outsourced and Why? 29<BR>c. Outsource Partner 31<BR><BR>VII. Outsourcing 33<BR>a. Introduction 33<BR>b. Company Profile 35<BR>c. What is Outsourced and Why? 39<BR>d. Outsource Partner 45<BR>e. Challenges 54<BR><BR>VIII. No Outsourcing 57<BR>a. Introduction 57<BR>b. Company Profile 57<BR>c. Challenges 61<BR><BR>IX. On-Shore Outsourcing Only 63<BR>a. Introduction 63<BR>b. Company Profile 63<BR>c. What is Outsourced and Why? 66<BR>d. Outsource Partner 69<BR>e. Challenges 74<BR><BR>X. Off-Shore Outsourcing Only 75<BR>a. Introduction 75<BR>b. Company Profile 75<BR>c. What is Outsourced and Why? 78<BR>d. Outsource Partner 85<BR>e. Challenges 93<BR><BR>Table of Figures<BR><BR>Figure I-1 Performance: Outsourcing Compared to No Outsourcing. 6<BR>Figure I-2 Why does your organization outsource?... 6<BR>Figure I-3 Outsourcing Approaches . 7<BR>Figure I-4 Outsourcing Strategy Assessment Metrics .... 9<BR>Figure I-5 Outsource partner selection criteria ... 10<BR>Figure III-1 Does your organization currently outsource any of its IT related functions? .. 12<BR>Figure III-2 Company's market positioning compared to competition – Revenue Size . 13<BR>Figure III-3 Company's market positioning compared to competition – Revenue Growth. 13<BR>Figure III-4 Company's market positioning compared to competition – Profitability.... 14<BR>Figure III-5 Company's market positioning compared to competition – Market Share.. 14<BR>Figure III-6 Company's market positioning compared to competition – Level of IT Automation 15<BR>Figure III-7 Job Title . 15<BR>Figure III-8 What is your primary Industry? . 16<BR>Figure III-9 What is the level of your organization's IT outsourcing to non-US locations? 17<BR>Figure III-10 Outsourcing Plans 17<BR>Figure IV-1 Performance: Outsourcing Compared to No Outsourcing. 18<BR>Figure IV-2 What are the barriers to outsourcing contracts?.. 19<BR>Figure IV-3 Company Performance: Outsource to US Only Compared to Off-Shore Only .... 21<BR>Figure IV-5 IT Budget.... 21<BR>Figure IV-6 IT Budget (% of Revenue).... 21<BR>Figure IV-7 What is the level of your organization’s IT outsourcing to non-US locations? .... 23<BR>Figure V-1 Outsourcing % of IT Operating Budget 25<BR>Figure V-2 Why does your organization outsource? .... 26<BR>Figure V-3 What IT functions does your organization outsource to US and/or non US locations? ... 26<BR>Figure V-4 Outsource partner selection criteria . 27<BR>Figure V-5 How important is cost in evaluation your outsource relationship? .... 28<BR>Figure V-6 Outsource Countries 28<BR>Figure VI-1 Outsource percentage of IT operating Budget .... 29<BR>Figure VI-2 Why does your organization outsource?... 30<BR>Figure VI-3 What IT functions does your organization outsource to US and/or non US locations?.. 30<BR>Figure VI-4 Outsource Partner Selection Criteria ... 31<BR>Figure VI-5 How important is cost in evaluating your outsource relationship? ... 32<BR>Figure VI-6 Outsource Countries ... 32<BR>Figure VII-1 Performance: Outsourcing Compared to No Outsourcing 33<BR>Figure VII-2 Your company’s market position compared to competition – Revenue Size. 35<BR>Figure VII-3 Your company’s market position compared to competition – Revenue Growth. 36<BR>Figure VII-4 Your company’s market position compared to competition – Profitability ... 36<BR>Figure VII-5 Your company’s market position compared to competition – Market Share . 37<BR>Figure VII-6 Your company’s market position compared to competition – Level of IT automation. 37<BR>Figure VII-7 What is your primary ndustry? 38<BR>Figure VII-8 Use of Outsourcing.... 39<BR>Figure VII-9 Why does your organization outsource? . 40<BR>Figure VII-10 Cost savings from outsourcing to US and/or non-US locations .... 40<BR>Figure VII-11 Level of satisfaction with outsourcing .. 41<BR>Figure VII-12 What IT functions does your organization outsource to US and/or non-US locations? ... 41<BR>Figure VII-13 Level of IT outsourcing to non-US locations? 42<BR>Figure VII-14 Percent of budget to non-US location ... 42<BR>Figure VII-15 Percent of budget to US location. 43<BR>Figure VII-16 Why does your organization outsource to non-US locations?.. 43<BR>Figure VII-17 Cost savings from outsourcing to non-US locations . 44<BR>Figure VII-18 What IT functions does your organization outsource to non-US locations? 44<BR>Figure VII-19 Outsource partner selection criteria.. 45<BR>Figure VII-20 Outsource percentage of IT operating budget . 46<BR>Figure VII-21 How important is cost in evaluating your outsource relationship? 46<BR>Figure VII-22 How important is user satisfaction in evaluating your outsource relationship? 47<BR>Figure VII-23 How important is service availability in evaluating your outsource relationship? . 47<BR>Figure VII-24 How important is time-to-process request in evaluating your outsource relationship? .... 48<BR>Figure VII-25 How important is on-time delivery in evaluating your outsource relationship? 48<BR>Figure VII-26 How important is ability to staff team with qualified personnel in evaluating your outsource relationship? 49<BR>Figure VII-27 How important is backlog number of requests pending in evaluating your outsource<BR>relationship? 50<BR>Figure VII-28 How important is defect rate in evaluating your outsource relationship? .... 50<BR>Figure VII-29 How important are non-compliance incidents in evaluating your outsource relationship? ... 51<BR>Figure VII-30 Type of outsourcing organization 51<BR>Figure VII-31 Current Outsource Countries.. 52<BR>Figure VII-32 Who does the off-shore outsource report to?... 52<BR>Figure VII-33 How did you learn about your off-shore IT outsourcer? 53<BR>Figure VII-34 Outsource contingency plans.. 54<BR>Figure VII-35 Are you concerned about the financial viability of your off-shore outsourcing contractor? . 55<BR>Figure VII-36 Has the prospect of war or political unrest caused your organization to curtails its off-shore outsourcing? 55<BR>Figure VII-37 What are the barriers to off-shore outsourcing contracts?... 56<BR>Figure VIII-1 Your company’s market position compared to competition – Revenue Size 57<BR>Figure VIII-2 Your company’s market position compared to competition – Revenue Growth .... 58<BR>Figure VIII-3 Your company’s market position compared to competition – Profitability .. 58<BR>Figure VIII-4 Your company’s market position compared to competition – Market Share 59<BR>Figure VIII-5 Your company’s market position compared to competition – Level of IT Automation ... 59<BR>Figure VIII-6 What is your primary industry 60<BR>Figure VIII-7 Outsource plans... 60<BR>Figure VIII-8 What are the barriers to outsourcing contracts? .... 61<BR>Figure VIII-9 What are the barriers to foreign outsourcing contracts?.. 62<BR>Figure IX-1 Your company’s market positioning compared to competition – Revenue Size .. 63<BR>Figure IX-2 Your company’s market positioning compared to competition – Revenue Growth.. 64<BR>Figure IX-3 Your company’s market positioning compared to competition – Profitability 64<BR>Figure IX-4 Your company’s market positioning compared to competition – Market Share .. 65<BR>Figure IX-5 Your company’s market positioning compared to competition – Level of IT Automation. 65<BR>Figure IX-6 What is your primary Industry? . 66<BR>Figure IX-7 Outsource percentage of IT operating budget 66<BR>Figure IX-8 Use of outsourcing. 67<BR>Figure IX-9 Why does your organization outsource?... 67<BR>Figure IX-10 Cost savings from outsourcing to US and/or non-US locations 68<BR>Figure IX-11 What IT functions does your organization outsource to US and/or non US locations? 68<BR>Figure IX-12 What is the level of your organization’s IT outsourcing to non-US locations? .. 69<BR>Figure IX-13 Outsource partner selection criteria ... 69<BR>Figure IX-14 How important is cost in evaluating your outsource relationship? . 70<BR>Figure IX-15 How important is user satisfaction in evaluating your outsource relationship?.. 70<BR>Figure IX-16 How important is service availability in evaluating your outsource relationship? .. 71<BR>Figure IX-17 How important is average time-to-process request in evaluating your outsource relationship?… 71<BR>Figure IX-18 How important is on-time delivery in evaluating your outsource relationship? . 72<BR>Figure IX-19 How important is ability to staff team with qualified personnel in evaluating your outsource relationship? 72<BR>Figure IX-20 How important is backlog # of requests pending in evaluating your outsource relationship? 73<BR>Figure IX-21 How important is defect rate in evaluating your outsource relationship?. 73<BR>Figure IX-22 How important are non-compliance incidents in evaluating your outsource relationship? .... 74<BR>Figure IX-23 What are the barriers to foreign outsourcing contracts? .. 74<BR>Figure X-1 Your company’s market position compared to competition – Revenue Size.... 75<BR>Figure X-2 Your company’s market position compared to competition – Revenue Growth ... 76<BR>Figure X-3 Your company’s market position compared to competition – Profitability . 76<BR>Figure X-4 Your company’s market position compared to competition – Market Share.... 77<BR>Figure X-5 Your company’s market position compared to competition – Level of IT Automation .. 77<BR>Figure X-6 Your company’s market position compared to competition – Market Share.... 78<BR>Figure X-7 What is your primary industry? .. 78<BR>Figure X-8 Use of outsourcing .. 79<BR>Figure X-9 Why does your organization outsource? .... 80<BR>Figure X-10 Cost savings from outsourcing to US and/or non-US locations.. 80<BR>Figure X-11 Level of satisfaction with outsourcing 81<BR>Figure X-12 What IT functions does your organization outsource to US and/or non-US locations?. 81<BR>Figure X-13 What is the level of your organization’s IT outsourcing to non-US locations? ... 82<BR>Figure X-14 Percent of budget to non-US location . 82<BR>Figure X-15 Percent of budget to US location ... 83<BR>Figure X-16 Why does your organization outsource to non-US locations? .... 83<BR>Figure X-17 Cost savings from outsourcing to non-US locations.... 84<BR>Figure X-18 What IT functions does your organization outsource to non-US locations? ... 84<BR>Figure X-19 Outsource partner selection criteria .... 85<BR>Figure X-20 Outsource percentage of IT operating budget .... 85<BR>Figure X-21 How important is cost in evaluating your outsource relationship? .. 86<BR>Figure X-22 How important is user satisfaction in evaluating your outsource relationship? ... 87<BR>Figure X-23 How important is service availability in evaluating your outsource relationship?.... 87<BR>Figure X-24 How important is average time-to-process request in evaluating your outsource relationship?… 88<BR>Figure X-25 How important is on-time delivery in evaluating your outsource relationship? .. 88<BR>Figure X-26 How important is ability to staff with qualified personnel in evaluating your outsource<BR>relationship? 89<BR>Figure X-27 How important is backlog # of requests in evaluating your outsource relationship? 89<BR>Figure X-28 How important is defect rate in evaluating your outsource relationship? .. 90<BR>Figure X-29 How important are non-compliance incidents in evaluating your outsource relationship?. 90<BR>Figure X-30 Type of outsourcing organization .. 91<BR>Figure X-31 Outsource Countries... 91<BR>Figure X-32 Who does the off-shore outsourcer report to?.... 92<BR>Figure X-33 How did you learn about your off-shore IT outsourcer?... 92<BR>Figure X-34 Outsource contingency plan. 93<BR>Figure X-35 Has the prospect of war or political unrest caused your organization to curtail its off-shore<BR>outsourcing? 93<BR>Figure X-36 Are you concerned about the financial viability of your off-shore outsourcing contractor?.... 94<BR>

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