Canadian Business Leaders Reluctant to Outsource: Accenture

📅 February 1, 2002 - Cost-cutting has become the number one priority of Canadian executives, and while they acknowledge that outsourcing can help themachieve this goal executives fear the change it may bring to their corporateculture, loss of control and the changes in management style it demands,according to an Accenture (accenture.com) survey of over 300 Canadian executives in both the public and private sectors.

The company's study titled, "Business Transformation Outsourcing, CanadianPerceptions," found that 80 per cent of executives believe that outsourcingdemands a different management system, while 75 percent feel that itradically changes the nature of an entire organization. Accenture definesBusiness Transformation Outsourcing as a program to change the way abusiness works by using outsourcing to improve in performance across theentire enterprise.
"Outsourcing does necessitate change within their organization, but businessleaders can take comfort in the fact that a strategic outsourcingarrangement offers them shared risk, additional expertise, and ultimately itsatisfies their cost-cutting objective," said Blake Hanna, Accenturepartner, communications and high tech. "While Canadian business leaders arerightly focused on the short-term imperative of reducing overhead, those whoignore the longer-term strategic advantages of outsourcing face a biggerpotential risk - the risk of falling behind their global counterparts."
The study found that Canadian executives remain largely unaware of theemergence of the most strategic form of outsourcing relationship, BusinessTransformation Outsourcing, and its potential to create sweepingimprovements in performance.
"Outsourcing, and in particular, Business Transformation Outsourcing, oftenprovides a cost-effective and strategic way for organizations to focus onwhat they do best and position themselves for future change and growth,"said Hanna. "Business Transformation Outsourcing is about formingrelationships to achieve quick, dramatic improvements in performance.Canadian business leaders need to understand this new trend, explore itspossibilities, and add it to their management tool kits," said Hanna.
When asked about their most critical business priorities for the next twoyears, Canadian senior managers cited initiatives that will increaseoperational effectiveness and efficiency. Their top five organizationalpriorities are cutting costs (79%); improving customer satisfaction (79%);enhancing productivity (71%); recruiting and retaining top talent (66%); andattracting and retaining the right customers/clients (62%).
Other findings include:
64% of Canadian senior managers cite organizational cost savings asone of the key advantages of outsourcing85% of interviewees said they have a "favorable" or a "veryfavorable" impression of outsourcing relationships. The favorableimpression of outsourcing rises to 91% among executives who have "a lot ofexperience" with outsourcingMore than 90% of survey respondents said that they have previousexperience with outsourcing relationships, and almost half currently rely onsome form of IT outsourcing. That said, most respondents still characterizetheir experience with outsourcing as "limited"68% said that outsourcing certain business functions, processes, orentire organizational entities is a priority in 2002 and 2003A significant number of business organizations say they wouldconsider turning to a strategic Business Transformation Outsourcingsolutions partner to help them transform the way their business works inorder to achieve dramatic enterprise-level improvements
The survey was conducted by Northstar Research Partners during Nov. 2001. Atotal of 304 decision-makers within Canadian government organizations andcompanies in four key industries - financial services;communications/high-tech; resources/utilities; and manufacturing/retail -were surveyed.