Many large organisations that outsourced information technology and other services are bringing some operations back in-house, according to a new study by Deloitte. The organisations who participated currently spend $50 billion on outsourcing and they have found the outsourcing process is much more complex than initially anticipated. Dissatisfaction with cost savings and reduced flexibility were found to be the primary reasons behind participants' responses.
The study, "Calling a Change in the Outsourcing Market" reveals that 70% of participants have had negative experiences with outsourcing projects and are now exercising greater caution in approaching outsourcing. One in four participants have brought functions back in-house after realising that they could be addressed more successfully and/or at a lower cost internally, while 44% did not see cost savings materialising as a result of outsourcing.
"In the short-term, outsourcing may become less appealing for large companies because it is not delivering the value as promised, and its appeal as a cost-savings strategy will also diminish as the economy recovers from recession and companies look for differentiated solutions to support their growth," said Richard Punt, strategy partner at Deloitte. "However, outsourcing can still deliver value to companies that enter into outsourcing for the right reasons.