In the face of terrorist attacks and a global recession, companies continue to evaluate and implement outsourcing programs, particularly for their high-tech operations (see Global Securities Services).
A recent survey of CFOs reveals that 36 percent of companies are most likely to farm out management of their computer hardware; 28 percent entrust their Web sites and e-commerce business to outside companies; and 24 percent favor outsourcing for IT software management. Another 24 percent of those polled go to outside companies to run their technical assistance call centers.
Among those who say they are not using outside vendors, 23.5 percent say that they would consider doing so over the next year.
For the companies that do outsource, 74.2 percent stick to domestic service providers.
Still, going abroad does hold strong attractions. Of those who outsource abroad, 68.8 percent cite the low cost of overseas providers as the main reason to seek help outside the country. Somewhat surprisingly, 25 percent go abroad for technical skills.
A solid plurality of companies that outsource overseas, 41.7 percent, spend most of their money in India, the survey found. Ireland is a distant second with 8.3 percent. In man-hours, India again comes in first, with 45.5 percent.
September 11 has not scared many companies away from outsourcing abroad. More than 82 percent of respondents say they are not concerned about using overseas vendors.
Among the 17.6 percent who have questions about outsourcing abroad in the wake of September 11, half say their greatest fear is loss of data, while the possibility of attacks on their service centers troubles 33.3 percent.
Does your company outsource any of the following services? (Check all that apply.)
Call centers for technical assistance 24.0%
Call centers for customer assistance 16.0
Data management 20.0
Human resources management 16.0
Other (non-HR) internal administration 20.0
Enterprise security 20.0
Web site/e-commerce management 28.0
Information technology software management 24.0
IT hardware management 36.0
Billing 4.0
If not, are you considering doing so in the next 12 months?
Yes 23.5%
No 76.5
If not, would you consider doing so in the next three years?
Yes 40.0%
No 60.0
If your company outsources services, does it source to providers outside the U.S.?
Yes 25.8%
No 74.2
If not, are you considering doing so in the next 12 months?
Yes 13.3%
No 86.7
Would you consider doing so in the next three years?
Yes 24.1%
No 75.9
If your company uses overseas outsourcing, what are the principal services? (Check all that apply.)
Call centers for technical assistance 10.0%
Call centers for customer assistance 20.0
Data management 10.0
HR management 10.0
Other (non-HR) internal administration 10.0
Enterprise security 10.0
Web site/e-commerce management 0.0
IT software management 30.0
IT hardware management 20.0
Billing 0.0
What is your company’s principal reason for outsourcing services overseas?
Technical capability 25.0%
Cost 68.8
Management of the service is handled by the supplier of the system 6.3
Where overseas does your company outsource the most, in dollar terms?
India 41.7%
Ireland 8.3
Southeast Asia (Singapore,Thailand) 0.0
Hong Kong 0.0
Other 50.0
Where overseas does your company outsource the most, in terms of man-hours?
India 45.5%
Ireland 9.1
Southeast Asia 0.0
Hong Kong 0.0
Other 45.5
In the wake of the September 11 terrorist attacks, do you have concerns about outsourcing overseas?
Yes 17.6%
No 82.4
If yes, what is your major concern?
Attacks on service centers 33.3%
Loss of data 50.0
Theft of data 16.7
If your company does not currently outsource overseas, have the September 11 attacks:
Dissuaded you from doing so, because your outsourced resources might be more vulnerable 2.9%
Encouraged you to do so, to duplicate service capabilities 2.9
Encouraged you to do so, to disperse service capabilities 0.0
Had no impact on the decision 94.1
If your company does currently outsource overseas, have the September 11 attacks:
Dissuaded you from doing so, because your outsourced resources might be more vulnerable 0.0%
Encouraged you to do so, to duplicate service capabilities 7.7
Encouraged you to do so, to disperse service capabilities 0.0
Had no impact on the decision 92.3
The results of CFO Forum are based on quarterly surveys of a universe of 1,600 chief financial officers. Because of rounding, responses may not total 100 percent.
