Research Studies

"Calling a Change in the Outsourcing Market"

No author cited
Deloitte, April 2005.

According to this Deloitte survey of senior executives, 70 percent have had “significant negative experiences” with outsourcing initiatives. The study found that outsourcing projects often did not meet with the respondents expectations and the results often ran contrary to what they hoped to accomplish by transferring select operations to contractors. Among the key findings:

Seventy percent cited cost savings as the impetus for pursuing outsourcing, but 38 percent wound up paying a variety of hidden or added costs.
Fifty-seven percent cited quality and innovation, but 31 percent said that their vendors’ performance fell short of expectations.
Thirty-five percent cited flexibility and capacity, but many found that the contracts they signed were too rigid and did not allow for last minute changes.
A little over one in five (22 percent) cited quality labor, but the same amount found that their vendors experienced high levels of employee turnover, negatively impacting the quality of their work.

Deloitte surveyed representatives of 25 large organizations across a wide variety of industries, including manufacturing, health care, financial services and technology/media/communications.

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