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Top 10 Reasons Companies Outsource

1. Reduce and control operating costs
2. Improve company focus
3. Gain access to world-class capabilities
4. Free internal resources for other purposes
5. Resources are not available internally
6. Accelerate reengineering benefits
7. Function difficult to manage/out of control
8. Make capital funds available
9. Share risks
10. Cash infusion

Source: Survey of Current and Potential Outsourcing End-Users
The Outsourcing Institute Membership, 1998
Numbers do not add up to 100% due to rounding.



              

Details reveal information technology continues as the function most likely to outsource. Figure 2 shows information technology represents approximately 30% of all outsourcing expenditures. Human resources (16% of all activity), marketing/sales (14%) and finance (11%) are each highly engaged with outsourcing as well. Human resource outsourcing is in areas such as staff leasing, outplacement and job searches for new employees. Outsourcing Index details suggest new employees searches and staff leasing are up from 1996 levels while outplacement activities appear to have declined.
Cost reduction often is the primary push to outsource a non-core area. And when the savings are significant, slashing the costs almost in half, more and more American companies are taking advantage of the lower price, even if the supplier is half way around the world. On the IT waterfront, Indian outsourcers can save their American clients up to 45 percent of the project cost.

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