Friday, June 08, 2007

Outsourcing Not Effective at 38% of Mid-Sized Companies

An astonishing 38 percent of all mid-sized companies report that their SG&A* (selling, general and administrative) outsourcing projects are less than fully effective, with 15 percent reporting they are now "worse off" after outsourcing. That's according to a new survey of CFOs and other senior financial executives at 35 blue-chip North American companies and divisions released today by AlixPartners LLP.
"The overriding reason companies aren't getting the returns they want," said Neal Ganguli, co-leader of the survey and a director at AlixPartners, "is that while companies rightfully devote a lot of energy to looking 'outward' as they outsource -- working to select the right vendors, etc. -- they all too often don't also look 'inward' enough, in order to adequately prepare themselves for all that successful outsourcing demands inside their own companies."

For instance, when asked to list reasons outsourcing projects were ineffective, the top reason given was "internal resource issues." This placed well above "poor vendor performance." By the same token, when asked why effective projects were effective, "management effort" (internal to the company itself) led the way.

Do you think this report will stop the trend of outsourcing our jobs to foreigners? Unfortunately unless it negatively effects the bottom line it will not stop.

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