The Hackett Group, a financial research firm, reports that “World-class companies out¬source a substantially larger portion of their IT processes [44.5% compared to 30.2%] than peer group companies: close to half of all their technology infrastructure-related processes.”
Bank of America recently turned some of their programming work over to an offshore provider, with excellent results; the company has saved roughly $100 million since 2001.
But just as important was the impressive savings in time spent developing new products and services. By sending some of its work offshore, BofA became a 24-hour company. At the end of the workday, California programmers could hand off projects overnight to colleagues in India, who would continue the work and hand it back the next morning.
BofA’s chief technology, service and fulfillment executive, Barbara Desoer, says of the experience, “There’s a lot that we’ve learned from our vendors that we’ve been able to bring back to the U.S. “
Technology is not the only area in which top companies are successfully outsourcing. The IBM Corporation outsourced its contact center needs through TeleServices, with remarkable results. The company experienced a 97 percent reduction in the cost of customer contact and shortened their outside sales cycles by up to 80 percent.
The contact center agents, who received training to acquire the needed IBM product knowledge and customer service skills to represent the company, were able to generate 125 percent of the company’s goal for sales leads.
IBM customers reported that agents exceeded their expectations in 78 percent of calls. The call center provider also created a marketing database of customer data to improve targeting and responsiveness and increase customer retention.
Why are top companies outsourcing now more than ever? Business Week magazine put it succinctly, “Outsourcing is a strategic tool that can react faster to the demands of the marketplace and their customers. It allows companies to shift gears quickly while not losing their emphasis on maintaining the core business”.