Offshore FM falls short

Offshore outsourcing is not the big money saver most companies expected, according to a survey of UK companies.

Offshore outsourcing is not the big money saver most companies expected, according to a survey of UK companies.

Outsourcing specialist, Orbys Consulting, which conducted the poll, says businesses are also encountering contractual and legal problems which they should have avoided.

Bob Aylott, principal consultant at Orbys, says much of the expected savings were lost in fees to agencies, which were involved in setting up three-quarters of European offshore deals. 'Most companies are looking at savings as their main priority, but at least half of those have been disappointed about the savings they have achieved. What they did find, however, was much better flexibility, and skills and resource availability, than they expected.'

The survey found many of the problems experienced were logistical, legal, and issues relating to human resources.

'You really have to manage the relationship extremely well, and the start-up learning was very important in getting people to work together in the same processes and procedures. And there was a significant overhead in doing that,' says Aylott.

Orbys says it expects the offshore IT market to continue to expand as large companies make better use of the industry and smaller ones enter the market for the first time.

India is still the largest offshore region, accounting for 83 per cent of deals, but in the next five years, Orbys believes eastern Europe will see big growth.
This was last published in May 2001

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