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Client-Supplier relationship key to outsourcing success – Grant Thornton report

New research from the Grant Thornton International Business Report (IBR) reveals that the intangible aspects of an outsourced relationships – a partner's reliability, trust and other 'non-technical' skills – matter most in building successful outsourcing partnerships.

Based on the views of over 2,500 senior business executives in 36 economies around the world, the IBR reveals that up to two-fifths of companies globally are open to outsourcing elements of their operations. Globally, payroll and HR functions remain the most common back-office processes to be outsourced, with 34% of businesses either currently outsourcing these processes or planning to do so. Within Europe, the UK represents the second largest market where these processes are outsourced, just behind Italy. A smaller share (27% internationally) of the surveyed businesses currently, or plan to, outsource finance and accounting processes.

The report, Outsourcing: Beyond technical expertise [ 1264 kb ], also looks at the drivers behind a successful outsourcing relationship. It suggests that the cost of outsourcing is a secondary consideration to service reliability, amongst 43% and 56% of respondents, respectively. Trust in the supplier also came as a high priority amongst 40% of businesses surveyed globally. In the UK, where the outsourcing market is considered a more mature one, 'understanding my business' replaced trust in the supplier as the third most important consideration.

Intangible assets, or the soft skills a provider brings to a relationship, are more often the main contributors to a successful outsourcing experience. Respondents cited communication (88%) and quality of the relationship between client and provider (87%) as the most critical ingredients in a positive outsourcing experience. The provider's relevant experience was also a major consideration amongst 82% of those surveyed.

Samantha George, head of outsourcing at Grant Thornton UK LLP, commented: "Companies that outsource expect their providers to have all the specialist skills and IT systems needed to deliver the contracted services. The 'softer' and less quantifiable elements of an outsourced relationship are more often the ones that make the most difference. As in any relationship, trust and communication remain vital to its success. 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. 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. This leads to a more open and engaged relationship between both companies and one which is more likely to succeed."

The report also confirms that the majority of outsourcing contracts deliver the desired benefits to businesses, particularly within more mature markets. The more mature the outsourcing market, the greater level of satisfaction outsourcing clients appear to have. In the UK and US, 82% and 80% of businesses have never brought an outsourced service back in-house, respectively.

Samantha George continued: "Once UK companies make their outsourcing decision and they see that it works, they don't tend to go backwards. The few who do, tend to do so after a planned review of whether or not they still need to outsource a particular function." 

For a copy of the report, including recommendations on establishing a fruitful outsourcing experience for all parties concerned, please click here [ 1264 kb ].