Getting Good Value From Outsourcing

23 July 2008

GFT, a leading international supplier of innovative business consulting and IT solutions, has today responded to two surprising research results from the Management Consultancies Association research, which asked 70 members of the British Bankers Association about their outsourcing plans. The results found that “41% of respondents expect to increase outsourcing levels” but at the same time, “only 54% felt their organisation understood how to get good value from outsourcing”.

GFT UK Managing Director, Graham Underwood, commented on this surprising outcome, saying, “Almost half of this research sample doesn’t get good value from outsourcing! If the European IT outsourcing industry is worth $171.4bn as Forrester predicts , then nearly $80bn of that is poor value. Making this 10% more efficient could put $8bn back on the bottom line of Europe’s businesses which, in today’s economic climate would be a great fillip to the collective balance sheet! Now is definitely the time therefore, for a considered outsourcing strategy, one which enables a financial institution to focus on its core business and ride out the storm”.

GFT recognises that, despite the economic conditions, compliance issues and management and delivery of middle and back office processes are still driving the demand for technical change and improvements. This financial industry is certainly aware that costs can be kept down through outsourcing, often removing the need for increased headcount. So perhaps a strategic approach to outsourcing can also offer improved flexibility enabling the resourcing requirement to change as operations develop?

Graham Underwood continues, “getting good value from outsourcing does not mean plumping for the cheapest option. These questions should always be asked before outsourcing, but in a downturn the answers become even more critical. Financial institutions should ask themselves: What exactly are the businesses needs? How complex is the operation or project? Who do I need? Where can I get the specialists and can I have them onsite if I need them? Is it better to have a combination of people in various locations, can I vary this over time? Only then should price be considered; given the above, have I got the best price rather than just the cheapest option?

The company therefore believes that the focus, in this new era, must be on being clever and shrewd; getting the right people, in the right place at the right price. In a volatile climate, financial institutions must get the best value out of outsourcing and fully understand the potential benefits of a combination of near- and far-shore outsourcing. Only then can it be turned to competitive advantage.

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