Satisfaction equals investment, says study

International outsourcing and insourcing advisory firm EquaTerra today released the results of its new study, “Outsourcing Management and Governance: Building a Foundation for Outsourcing Success.” Over 250 North American ITO and BPO decision makers participated in the study, with three-quarters representing organizations valued at over $1 billion in annual revenue. The key conclusion from the study is the discovered direct correlation between the investment made in outsourcing management and governance (OM/G) and outsourcing engagement satisfaction. EquaTerra usually advises clients to seek an optimum investment level of between four to seven percent of the total annual contract value on OM/G for greatest satisfaction from outsourcing deals; the study supported this suggestion.

The announcement provided further revelations, including: outsourcing satisfaction improves over time, with CRM and IT executives reporting the highest levels; nearly half of all respondents were found to spend four percent or less on OM/G; and greater satisfaction was found among executives outsourcing for process improvement versus cost savings. The report also listed the three industries with above-average levels of outsourcing satisfaction: high-tech products and service providers; pharmaceuticals; and automotive / manufacturing. CRM executives were mentioned alongside those of IT as those likely to be most satisfied with outsourcing agreements.

Study authors chalked this up to their status as the most mature outsourced processes; EquaTerra writers opined that many HR outsourcing organizations are relatively new to large-scale outsourcing and typically under-invest in OM/G. Industries which have outsourced for a longer period of time, claims the study, cited higher levels of satisfaction. Assessing the components of OM/G tool capabilities that respondents viewed as most crucial to the success of their outsourcing engagements, the study found service quality to be the most important functionality in OM/G tools; communication capabilities ranked least important.

In contrast, IT executives called communication management of chief importance in OM/G tools. In summary, EquaTerra research managing director Stan Lepeak said that “While EquaTerra has long cited the value OM/G contributes to the success of outsourcing initiatives, this study confirms the clear connection between OM/G and outsourcing satisfaction.” Analysis of the results will be conducted in a webcast entitled “Outsourcing Management and Governance: Building a Foundation for Outsourcing Success” on Thursday, June 1 at 11am EST.