Offshore outsourcing to grow 81%.

Research, based on a survey of 100 senior UK executives responsible for outsourcing within large companies, reveals that 81% plan to increase their offshore outsourcing over the next 2-3 years, while only 4% expect to decrease it. Despite this predicted growth in outsourcing, TPI's research also reveals that large companies choosing to "offshore" their information technology (IT) and business processes to low-cost locations, such as India and China, are increasingly doing so through wholly owned subsidiaries ("captives") rather than external service providers. The development is just one of numerous trends, including the relocation of some offshored services and a greater diversity in viable offshore locations, which TPI concludes signify increasing maturity in the offshore outsourcing market. Duncan Aitchison, Managing Director, International with TPI commented: "Our survey results clearly indicate that there is very little disillusionment with offshore outsourcing. What we can observe, however, is a general shift towards more sophisticated sourcing strategies as the global sourcing market comes of age.

Offshore destinations in close competition for second place after India

As the outsourcing market has matured, UK outsourcing buyers have come to see a wider range of countries as viable offshore destinations. While India continues to enjoy its first mover advantage, being used by 75% of survey respondents, there is close competition for second place, between Central and Eastern Europe (28%) and China (25%).

Despite being less widely used than India, Central and Eastern Europe is seen as equally appealing an outsourcing location, with both destinations rated attractive by 59% of respondents. It appears likely Other major findings of TPI's survey research include: Indian providers rival Western firms on quality 60% of those that have had any significant exposure to Indian outsourcing providers believe they offer a service to rival Western providers irrespective of any cost savings.

Failure rates in outsourcing dramatically overstated 

Only 4% of UK outsourcing buyers are dissatisfied with their outsourcing arrangements, while 42% are, very satisfied". Contrary to widespread expectations, 48% even believe outsourcing has improved customer satisfaction. 64% also say that their organisation's contingency planning has improved as a result of their outsourcing; 80% say outsourcing has improved corporate governance by clarifying responsibilities.

www.tpi.net