UK unconvinced by benefits of outsourcing

More than a one third (38 per cent) of British companies that have tried outsourcing claim it has been a complete failure or delivered fewer benefits than expected.

A Gallup survey of 150 British businesses released today by Proudfoot Consulting shows that just over half of those polled outsource some part of their business, with 44 per cent of British firms choosing to keep all business functions in-house – significantly more than their US counterparts at 33 per cent.

The survey of 925 senior executives in nine countries and six sectors, found that In firms where outsourcing had failed, 15 per cent had brought functions back in-house.

Proudfoot Consulting’s European president Jean Thevelin said: “Our survey is further evidence that some firms have rushed into outsourcing, seeing it as some kind of panacea for under-performing business functions. A major trap management falls into is failing to sort out problem departments before outsourcing, leaving the outsourcing provider reaping the real benefits of efficiency and the company effectively giving money away.”

Other survey findings include:

– Back office processing is significantly more likely to be outsourced by UK firms – 11 per cent of UK firms that outsource do this compared to just 6 per cent globally.

– The most frequently outsourced business functions, both globally and in the UK, are IT support, logistics and transport, with sales and HR being the functions least likely to be outsourced.

– The UK is one of the countries with the lowest incidence of outsourcing – only Australia and Germany have less, with 46 per cent companies in these countries choosing to keep all business functions in-house. South African firms are most likely to outsource, with only 19 per cent of businesses there choosing to keep all functions in-house.