Date:21/07/2005 URL: http://www.thehindubusinessline.com/2005/07/21/stories/2005072102190400.htm

Back `CEO's role crucial in outsourcing'

Our Bureau

Hyderabad , July 20

THE outsourcing of IT and other business processes is likely to move from a 2005 average of 12 per cent of organisational costs to 20 per cent by 2008, according to a study on outsourcing by LogicaCMG.

The report, undertaken across the US, Europe, and Asia jointly with Warwick Business School and the Cullen Group, outlines key predictions for outsourcing activity, including global expenditure on outsourcing services.

Among the major findings, the study observes BPO overshadowing and incorporating IT outsourcing.

Mainstream BPO expenditure is likely to grow worldwide by 10 per cent a year from $140 billion in 2005 to over $220 billion by 2010.

The study, undertaken by Prof Leslie Willcocks of Warwick Business School and Ms Sara Cullen of Cullen Group, highlights the importance of the CEO in executing successful outsourcing initiatives where one-third of outsourcing deals could fail due to lack of CEO involvement.

The study encompasses over 1,200 organisations from across Europe, US, and the Asia-Pacific regions and covers `top ten' predictions for the next five years.

Mr Simon Ormston of Outsourcing, LogicaCMG, in a statement said: "The study illustrates that CEO involvement will help mitigate risk and enable an organisation to use the outsourcing deal to create a more competitive position"

While outsourcing expenditure will continue to rise, outsourcing is here to stay as `back-sourcing' will be minimal. Outsourcing will help `in-sourcing' as market disciplines will determine in-house service provision.