Outsourcing confidence rises but cost concerns persist
The National Outsourcing Association (NOA) has released its quarterly Outsourcing Confidence Index and claimed that over 50% of end-users are more confident with using outsourcing to support their businesses than they were in 2009.
The survey, conducted amongst 50 end-user organisations on the NOA's behalf, found that 52% were reviewing existing contracts and considering new sourcing opportunities as the economic recovery begins to kick in.
Owing to increasing confidence, 60% of respondents said they planned to outsource services not previously outsourced during 2010, with 56% of planning to increase the scope of pre-existing contracts.
And perhaps unusually given the nature of the current recession, the financial services industry was the most positive about the state of the market.
However, the NOA also found that the recession has made end-users more cost conscious. During the good times respondents sought an average saving of 10% from outsourcing contracts but are now demanding savings of 15% and over
"Outsourcing has traditionally been seen as a cost-saving mechanism for business, so during a torrid 2009 it is not surprising that interest is continuing to grow," said NOA chairman Martyn Hart.
"However, continued focus on cost above everything else means that many are pushing through higher-volume low cost contracts over shorter time frames. This short-termism can be dangerous and these kinds of contracts frequently fail," he warned.