02-25-2004, 05:30 AM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->How much does outsourcing really save companies? According to a November 2003 report by People 3, only 21.1 percent of companies surveyed reported a cost savings of greater than 20 percent due to IT outsourcing, while 18.4 percent did not achieve any cost reductions, and 9.2 percent actually had an increase in costs from outsourcing contracts. <!--QuoteEnd--><!--QuoteEEnd-->
I heard one of our execs say that the benefits from outsourcing accrue over some time. Initial costs in training, cultural acclimatisation, etc. add upto a lot of costs and people do tend to benefit less - thats what IBM figured out, he said. But it does lead to cost-savings. On the other hand, there does seem to be a lot of hype over the amount of cost-savings.
The reality - like in everything else - is somewhere in the middle. It would be interesting to see a breakdown of these companies in terms of the number of man-years involved in outsourcing.
I heard one of our execs say that the benefits from outsourcing accrue over some time. Initial costs in training, cultural acclimatisation, etc. add upto a lot of costs and people do tend to benefit less - thats what IBM figured out, he said. But it does lead to cost-savings. On the other hand, there does seem to be a lot of hype over the amount of cost-savings.
The reality - like in everything else - is somewhere in the middle. It would be interesting to see a breakdown of these companies in terms of the number of man-years involved in outsourcing.