Savings from outsourcing is an inflated myth? Well, it seems outsourcing of software and information technology and other business services only delivers on an average cost savings of mere 15 per cent. This revealing truth is delivered by TPI survey while shattering the perception that offshore outsourcing can save costs by over 60 per cent.
The study states that after paying professional fees, severance pay and mandatory governance costs the accrued savings range 10% to 39% while the average only rests at meager 15 per cent.
Duncan Aitchison, TPI's managing director said,
This research proves that the promise of massive operational savings is unrealistic when you take into account the costs of procurement and ongoing contract management. In our experience, outsourcing arrangements which focus solely on delivering huge savings often fail to meet client expectations
Another myth that the survey busted is increasingly to enhance the quality level companies are taking outsourcing route. In 2004 it was 11% and now the figures stands at 21%.
I only can say that the survey is not inclined to any group. It's quite balanced one actually.
Outsourcing Cost Savings Exaggerated
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