• Register
Return to: Home > News > Mid Tier > Quashing conventional wisdom about outsourcing

Quashing conventional wisdom about outsourcing

A recent survey by Grant Thornton has found that while conventional wisdom might suggest typical outsourcers to be small businesses looking for providers in low cost jurisdictions, reality paints a different picture.

Grant Thornton has released its annual International Business Report on outsourcing (IBR) entitled Outsourcing: Beyond technical expertise.

The IBR surveyed 2,571 business executives from 36 economies from around the world to explore what companies look for in their outsourcing relationships.

Amongst the IBR's key findings is the fact that intangible factors such as reliability, trust and soft skills count more than technical factors such as cost, in making outsourcing relationships work.

Indeed 56% of respondent said that the service reliability was the most important criteria when selecting an outsourcing provider against 43% of the respondent citing cost.

Grant Thornton UK head of outsourcing Samantha George said companies that outsource expect their providers to have all the specialist skill and IT system needed to deliver the contracted services.

Therefore, according to her, the softer and less quantifiable elements of an outsourced relationship are the ones that make the difference.

"As in any relationship, trust and communication remain vital to its success," George said. "With outsourcing increasingly on the agenda at international companies, the best providers will have progressed from offering a commoditised service based on price, to truly gaining the confidence of their clients as a strategic partner."

Consequently companies have also shifted their focus when choosing an outsourcing jurisdiction, the survey has found. "A decade ago, the attractions of outsourcing to India, especially, was all about cost." Grant Thornton's report reads. "Today many companies realise that this is no longer the only consideration - it's about being in a strategic location to serve our markets, accessing the right talent, and getting a good cultural fit for your needs."

Services in demand
IBR also revealed that payroll and human resources are the most common processes to be outsourced, with 34% of respondents currently outsourcing those processes.

On the other hand only 27% of the surveyed businesses outsource or plan to outsource finance and accounting processes.

According to the IBR, the fear of giving away control over critical aspects of internal reporting as well as confidential financial data is the main reason for the businesses' reluctance to outsource those processes.

However this is not the case in Latin America as 55% of the businesses surveyed in the region currently outsource finance and accounting services. According to the IBR new and tougher regulation in tax and anti-corruption associated with audit requirements are the driver of this strong demand in the region.

Outsourcing for all size
Another key finding of Grant Thornton's IBR is that all companies regardless of their size have outsourcing needs.

IBR found that outsourcing of back office processes, finance and accounting as well as payroll and HR, is equally prevalent among companies employing less than 200 people and businesses employing more than 200 people.

"Companies are also realising that they gain, rather than lose control when they outsource functions, because they can have their providers report to them on a frequent basis and request information in real-time," George concluded. "This leads to a more open and engaged relationship between both companies and one which is more likely to succeed."

Top Content

    Blockchain and the Big Four: does it deserve all the hype?

    Although still in its infancy, blockchain is one of the most talked-about technologies of 2018. Will the blockchain bubble burst, or will it live up to its reputation as the ‘new internet’? Eleanor Jerome investigates

    read more

    Malaysia: Ready to show its strength

    Recent changes have enhanced the quality of audit reports in Malaysia, giving the profession a welcome opportunity to demonstrate its value to clients. Paul Golden reports

    read more

    China: Regulating the Chinese dragon

    Harsh regulatory actions and looming US trade wars have been dampening expectations in a Chinese market still full of potential, finds Jonathan Minter

    read more

    Indigenous Australians: New checks and balances

    With fewer than 40 known qualified Indigenous Australian accountants, Jonathan Minter speaks to Shelley Cable from PwC Australia about how increasing this number is an important part of improving the financial literacy of Indigenous communities

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.