EquaTerra Survey Findings: Outsourcing Up

The following are some of the most recent findings by the research group EquaTerra. While the survey findings are focused on more general outsourced services, it does demonstrate that the first movers are now engaging outsourced solutions to survive the lengthening economic downturn.

Demand for Outsourcing Increases as Organizations Seek to Cut Costs – EquaTerra 2Q09 Survey: The latest EquaTerra’s 2Q09 Advisor and Business/IT Service Provider Pulse Survey cited an increase in the demand for global outsourcing services from organizations seeking options to reduce operational costs. The survey also revealed that the ongoing economic slowdown has shifted the key aim of majority of outsourcing buyers from realizing competitive advantage to surviving in this environment. Stan Lepeak, Managing Director of Global Research for EquaTerra, stated that the current economic conditions have made cost savings the key reason for outsourcing services.

Among the key findings, about 46 percent of EquaTerra’s client-facing advisors reported increased outsourcing demand and about 65 percent of outsourcing service providers reported continued growth in their new deal pipeline during 2Q 2009. Moreover, about 58 percent respondents stated the current economic environment as the reason behind the increase in outsourcing, reflecting a quarter-on-quarter increase of 20 percent. Additionally, majority of respondents cited transition-related issues as the leading reason behind the failure to meet clients’ outsourcing objectives.

One interesting point to note are the "transition-related issues" cited by survey respondents. Based on our experience, these types of challenges are a result of a number of factors, but primarily poor planning in the front end and lack of continued management support after the deal. Therefore it is important to take a holistic perspective at the earliest stages for sourcing engagements.