Executives not sold on outsourcing: report

Canadian corporate executives want to buy into the notion of outsourcing, but fear the backlash associated with the demise of their business culture, according to a recent study conducted by Accenture.

Accenture, a management and technology organization, released the results of its latest study on Thursday, entitled called Business Transformation Outsourcing, Canadian Perceptions. Of the 300 respondents, 90 per cent said they felt comfortable with some form of outsourcing. Nearly half maintain some form of outsourcing relationship.

A big reason behind the decision to outsource is the desire to cut costs, a factor cited by 79 per cent of respondents, says Accenture “Management feels that cost reduction across the organization is their number one priority,” said Mark Boudreau, partner solutions operations practice with Accenture in Toronto.

However, Accenture says it is a new outsourcing concept, business transformation that has executives puzzled. What appears to be happening is that executives are not yet aware of the new trend, but once the concept is explained to them more thoroughly, attitudes change as they become more aware of what the buzzword implies.

“(Businesses) are struggling with this new concept we see emerging is business transformation outsourcing. It looks at outsourcing in a strategic way,” said Boudreau.

He explained the business transformation model as the merging of two ideas – on the one hand, organizations need to cut costs but don’t have the finances to invest in the major overhaul that is often required, and so the logical alternative is to partner with an organization that will focus on adding that value.

History suggests that Canadian companies have been reluctant to relinquish their IT departments, partly because of costs involved, trouble deciding on what exactly to outsource, and because of the perception that the internal business culture will collapse. Nearly three-quarters of respondents said outsourcing “radically changes” the nature of an organization. Yet Boudreau maintained that Canada, on a per capita basis, is still outpacing the U.S. counterparts in the field.

The study included executives from across government agencies, the communications industry, resources and the products and manufacturing sector. While there is certainly a distinction in how the government and the private sector views their customer, they agreed on what needs to be emphasized in these uncertain financial times.

“The mood of the executives is let’s stick to our core business and do what we do well. The economic times would suggest this is not a growth period.”

The full study can be obtained by visiting the company’s Web site. Accenture in Toronto can be reached at http://www.accenture.ca

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Jim Love, Chief Content Officer, IT World Canada

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