February 15, 2012: Organizations that have outsourced some of their business functions to offshore locations are of the opinion that they have become more flexible and agile and are in a position to cope up with competition during uncertain times.
Most of the organizations believe that a corporate wide strategy for undertaking off shoring decisions is important in achieving growth. The strategy basically includes improvement in service quality and process improvements.
These findings were made in the survey report published by CIBER (Center for International Business Education) and the ORN (International Offshoring Research Network’s) Project at Duke University’s Fuqua School of Business. The data was collected from participating companies across the United States. The survey is a part of the research that was conducted on the off shoring of business on American competitiveness.
According to Arie Lewin, Director of CIBER, the companies in the United States that have expanded the scale and scope of outsourcing of business functions and processes are enjoying considerable operational and financial returns.
The percentage of participating companies who have made improvements in organizational flexibility as a result of offshoring has increased from 48% in 2009 to 66% in 2011.
Lewin says that cost savings is not the primary driving force behind off shoring anymore. The companies in the United States are outsourcing more of professional work to offshore location, particularly in the areas of Information Technology Infrastructure and maintenance and innovation process. The main reason for offshoring that the companies point out is the lack of qualified talents.
The companies in the US prefer to offshore business functions to locations such as India, China and Philippines and this is true in the case of services such as IT infrastructure, maintenance, and innovation activities.
Even though Latin American companies have become favorite destination for outsourcing, the organizations in the United States have not yet found distinctive advantages in shifting to such locations.
The respondents to the survey observed that service quality and data security are of important concerns for them.
The medium sized companies too are planning to offshore their business functions. The survey has found that 73 per cent of the respondents from the medium segment have responded that they plan to expand their current business process within a period of 2 to 3 years. Last year, the percentage of medium sized companies that were planning to expand their outsourcing activities was 55 per cent.
There is an increased call for including outsourcing in the overall growth strategy of the company and in more than 50 per cent of organizations in majority of the industries have a corporate strategy in place.