Outsourcing: What do the clients expect?

Flexibility? Cost reduction? Innovations? Risk avoidance? Quality improvements? Any of them? Or maybe all of them? What do companies expect making the decision about outsourcing operations?

A few days ago I visited an interesting conference organized by Computerwoche and held in Offenbach, Germany. Among others, the findings of a study dealing with the expectations and motivation for IT outsourcing and different customer profiles have been presented. This study has been undertaken by Prof. Helmut Krcmar and Dr. Stefanie Leimeister of the Technical University of Munich.

The key finding of the study is as follows: IT outsourcing market consists of different players. The combination of: cost, innovation, technology and business makes it possible to make the market segmentation and to divide the clients into 4 groups: business-efficiency clients, cost-conscious small shoppers, strategists & innovation seekers and IT excellence & reliability clients.

The first group, business-efficiency clients, is service-oriented and expects flexibility and quality improvement. These are bigger companies representing banking, insurance and finance industry, their annual revenues amount to over EUR 10bn and they employ 5000 and more staff.

The cost-conscious small shoppers are focused on cost reduction. They represent electrical engineering, consumer goods industry and IT services. These are middle-sized and big companies, employing 2000-5000 staff and having EUR 1-5bn revenues.

The third group, strategists & innovation seekers, consists of companies from the automobile industry, engineering, and public sector. They are small and middle-sized companies with revenues of EUR 250-500m and under 2000 employees. They expect IT and service innovations, joint product and service development, knowledge transfer from the provider, and access to qualified personnel.

And finally, the group consisting of IT excellence & reliability clients has different motives: IT focus (better and modern IT, cutting edge technology) and/or business focus (quality improvements, qualified personnel, risk avoidance). They represent small companies from manufacturing industry, which employ under 500 staff and generate EUR 50-500m revenues.

The study was conducted among German companies, however, future studies in other countries are planned.

Magdalena Szarafin
Magdalena Szarafin has immense knowledge of the outsourcing sector and is one of the authorities in shared services and outsourcing industry analysis. Her research interests include insourcing and outsourcing in connection with the value chain. She is an author of many publications dealing with outsourcing, knowledge management and total quality management (TQM).
Magdalena lives in Frankfurt, Germany and she works as an International Management Accountant in a big multinational group, dealing with preparation of financial statements under IAS/IFRS and local GAAP. In her leisure time she prepares a PhD dissertation focused on shared service centers.
Contact her to leverage her knowledge and in-depth BPO and shared service industry penetration experience.


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