New Outsourcing Survey suggests traditional outsourcing practices fail to deliver full benefits to clients

PRINCETON, NJ (PRWEB) October 14, 2004 -- Argea and the International Association of Contract and Commercial Managers (IACCM) today unveiled the results of their joint outsourcing survey conducted through August, 2004. The unique partnership brought together the specialized contract management knowledge of IACCM and the outsourcing practice insight of Argea to create a highly focused survey of contract management professionals from around the world. The survey of 104 international companies was conducted to gain better insight into actual practices and experiences of companies that outsource.

While the survey generally affirms outsourcing is delivering real benefits, there is evidence that significant improvements could come from more education, as well as improved planning, implementation and management of outsourcing projects. Three key findings stand out in the survey results.

Of the major findings, the first clearly demonstrates that outsourcing can save money and achieve efficiencies but can also create new problems. The study found that companies encounter similar problems, independent of company size, appearing across all industry sectors. Most companies are only attaining incremental improvements through costly trial and error.

Bill Batiste, Argea Chairman and former North American Head of Business Process Outsourcing for Pricewaterhouse Coopers, said, “I am very encouraged by the growth of outsourcing but disappointed the failure rates are not dropping quickly. At Argea, we are very committed to helping more clients have success with more outsourcing projects.”

In another finding, most respondents indicated they rely upon internal organizational learning for outsourcing education, creating dispersed pockets of expertise that are a challenge to outsourcing success. While a majority of surveyed companies turn to external resources for help with negotiating contracts, those resources often compound problems with aggressive negotiating tactics, weak contract structure and misalignment between contracts and business goals. The study suggests that companies usually wait too long to seek help from trusted advisors.

Tim Cummins, Executive Director of the IACCM commented, “We recognize that contract and commercial managers can play an important role in ensuring alignment with business goals. At present, it seems that responsibilities and accountability are often not well defined. Knowledge capture and information flows are typically fragmented – and this is reflected in wasted resources, excessive post-award disputes and the failure to consistently meet goals. IACCM has been working with major vendors and users of outsourcing to diagnose these problems and implement global solutions, for example, by undertaking comprehensive on-line skills analysis and benchmarks, to identify the key gaps and address overlaps and conflicts.”

Finally, too many companies in the survey use traditional and confrontational methods in negotiation and management with outsourcing suppliers. They generally lack awareness of the adversarial consequences in the outsourcing relationship. This undermines collaboration, project success and business goals.

On this finding, Ram Iyer, CEO of Argea said, “A central thesis in the founding of Argea was that outsourcing should be done by collaboratively integrating the capabilities of vendors. After all, you are making the vendor a part of the value chain of your company. Create partners out of them, not confrontational suppliers, and you will see greater success”. Cummins also focused on this finding, noting that the IACCM is working to change some of the traditional practices in vendor negotiations and management by publicizing their effect and promoting alternatives that achieve superior results.

Donnie Foster, EVP of Argea, who has 16 years of outsourcing experience on both the vendor and client-sides, said “Over the years I have seen the growth of outsourcing but have not seen a proportionate increase in skilled personnel across companies. The fact that 75% of the respondents did not think they had skilled resources internally to outsource effectively points to the need for more skilled advisors and implementation personnel”.

This cooperative survey by Argea and IACCM has provided increased understanding and insight into effective outsourcing. Each organization is committed to assisting senior executives to meet their goals by raising the knowledge and organizational capabilities of those responsible for constructing, negotiating and managing outsourcing relationships.

About ARGEA
Argea's Mission is to help US-based businesses become more globally competitive by intelligently choosing and collaboratively integrating global resources and technologies to drive business performance. Argea’s experts have deep business experience and many years of outsourcing experience. Whether you are already outsourcing or are new tooutsourcing, they provide education, advice and assistance with implementation.To find out how Argea can help your business, please visit http://www.argea.com or send an email to e-mail protected from spam bots.

About IACCM
It is a non-profit organization of senior managers and executives in Procurement, Strategic Sourcing, IT Procurement, Contract Management, Commercial Management, Negotiations and Legal. Its goal is to raise the performance and standards of commercial contracting and the professionals responsible for its management. It currently has a membership of 750 corporations in more than 80 countries, including the US, Australia, Benelux, Finland, Singapore and the United Kingdom. For more information, please visit www.iaccm.com or send an email to e-mail protected from spam bots.

Contact:
Lee Swindall
Argea
Tel. +1 608-987-1450
www.argea.com
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