Offshore outsourcing can boost agility

By Stephanie Overby , CIO |  IT Management, outsourcing

And there were other common threads among the companies reporting greater enterprise flexibility. For instance, they offshored a more diverse set of activities and were more likely to operate a center of excellence around global sourcing management. They also more frequently chose to send work to second-tier cities over global sourcing hot spots. And, in terms of outcomes, they reported greater cost savings from their sourcing efforts than those that did not report an increase in agility, said Lewin.

U.S. companies are beginning to recognize that a global sourcing strategy is an integral part of corporate growth strategy, according to Lewin, who contends that organizational flexibility will be critical for U.S. companies to compete against international rivals in emerging markets. In most industries, more than half of U.S. companies reported a corporate outsourcing strategy, according to the ORN study.

"As U.S. firms increase the scale and scope of their global sourcing, they are laying the foundation for achieving far-reaching organizational flexibility," Lewin said. "[Our clients] say that with these capabilities, they can redesign processes, enhance efficiencies, improve service quality and enable more effective access to new markets and promoting innovation."

IT-related outsourcing — application development and maintenance, IT infrastructure and innovation services — accounted for more than half of the corporate offshoring reported by the survey respondents. In the area of IT offshoring, corporate leaders indicated that they were more likely to offshore entire processes (43%) than discrete tasks (32%) today.

Offshoring Still Draws Concerns

The survey also found that concerns remain. For offshoring application development, respondents said the biggest risks were data security and intellectual property protection, both 26%, followed by service quality (24%). For IT infrastructure offshoring, the concerns were data security (35%), service quality (29%) and —interestingly — maintaining flexibility (21%).

Stephanie Overby is regular contributor to CIO.com's IT Outsourcing section.

Read more about it organization in CIO's IT Organization Drilldown.


Originally published on CIO |  Click here to read the original story.
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