Offshoring improves business competitiveness

Eight in 10 organisations believe that offshoring has improved their competitive position, according to research out today by the National Outsourcing Association (NOA).

The study also shows that a quarter of organisations now use offshore business process service delivery.

According to the study, the main ways that offshoring affects the competitiveness of organisations were identified as a combination of improved customer services, reduced costs, improved scalability and ability to manage fluctuations in workload. On the whole, respondents reported an average return on investment of around 29 per cent through the use of offshore services.

According to the research, 84 per cent of respondents believe that the use of offshore services makes a net contribution to the UK economy, which supports the findings released at this month’s CBI conference.

However, the majority of organisations (55 per cent) do not believe that offshoring is necessary to overcome UK and EU skills shortages. This means organisations tend to regard the use of offshore services as a means to improve their competitiveness through cost effective access to higher quality services and personnel, rather than as a means of overcoming skills shortages.

The NOA study also found that organisations were 100 per cent satisfied with the calibre of personnel and data security in offshore locations. The lowest satisfaction ratings were related to cultural compatibility (67 per cent) and language capability (67 per cent), indicating that organisations need to carefully assess these factors before opting for an offshore service.

Martyn Hart, chairman of the NOA, said: “Offshoring seems to be gradually shaking off the negativity that has surrounded it, mainly perpetuated by the media. Organisations are beginning to realise the real benefits that offshoring can bring, if managed effectively.”

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