Outsourcing Transfd

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Outsourcing Transformed: New Models and Methods

Document:                        STR-170
Date of Publication:           19May05
Number of Pages:             30
Lead Author(s):                 B. Guptill, B. McNee
Price:                               $1,975.00 USD (Single User License)

Report Overview:

Saugatuck research indicates that the steady growth in business process and IT outsourcing will not only continue through 2010, but will be increasingly driven by firms making strategic shifts in their traditional business value and operations.

This report examines the changing role of outsourcing as it becomes an even more critical element of overall business strategy. It looks at the state of outsourcing today from the perspective of a company's enterprise-wide approach to outsourcing, the perception of outsourcing as strategic advantage, and the role of offshoring.

It identifies key trends that Saugatuck believes will drive continued growth, including the trend toward buyers and vendors taking a more strategic view of outsourcing benefits, and the trend toward more strategic outsourcing relationships, including: Business Transformation Outsourcing, new delivery models and new pricing models. Lastly, we provide guidance and recommendations for both buying organizations and outsourcing vendors.

The study is a result of a year-long Saugatuck research program, including a web survey of more than 200 senior IT, finance and business executives and 40 detailed interviews. The research was conducted between October 2004 and March of 2005. More than two-thirds of the firms participating in the research had revenues of at least $1 Billion per year.

Research Summary:

	An increasing acceptance of Business Transformation Outsourcing (BTO), involving a more strategic relationship between service provider and client, will drive new sources of business value beyond cutting costs. Forty-three percent of companies say that the percentage of outsourcing spending categorized as BTO would increase from 2004 to 2005
	Twelve percent of outsourcing spending in 2005 will involve offshore resources, growing to 19 percent in 2009. Less than one-third of companies surveyed agreed that potential backlash against their company’s brand is impacting their offshore outsourcing decisions. And less than one-third agreed that consideration of the potential impact on their home country’s economy is impacting their offshore outsourcing decision.
	New standardized delivery models will reduce the upfront investment and short-term return on outsourcing options. Companies expect the percentage of their outsourcing spending that is for utility-type shared services to grow from 12 percent in 2005 to 22 percent in 2009 for IT outsourcing, and from 11 percent to 19 percent for business process outsourcing.
	New pricing models will better link outsourcing costs to business value obtained. The biggest changes in pricing models will be in benefits-based and equity-based models

Read This Report To Learn

	How and why sourcing models are changing to better meet changing business requirements
	Changing buyer profiles vis-a-vis how outsourcing is viewed as a cross-enterprise initiative, and its role in driving competitive advantage
	Buyer perceptions and spending plans concerning offshoring
	Spending profiles for BPO and BTO - and for utility-type shared services
	Buyer preferences concerning emerging pricing models
	Vertical and functional market readiness rankings

Table of Contents (Click Here)

Press Release - 19May05

Related Research

	04-28-04 Offshoring/Outsourcing Debate: Sorting Out the Issues
	03-3-04 BPO: The Answer is . . . "It Varies" (Part 1)
	12-15-03 BSPs Will Impact Business Process Outsourcing
	02-07-03 A Vertical Go-To-Market Framework for IT Services

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