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Outsourcing Facts and IAOP Quotes

Need information in a hurry to meet that deadline? Feel free to use any of the following information or quotations to strengthen your article. For any specific questions you might have, contact Michael Forbes, IAOP Manager – Communications.

Quotes are attributed to either IAOP Chairman Michael F. Corbett or IAOP Managing Director of Thought Leadership Jagdish Dalal as indicated unless otherwise noted.

Jump to these Topics:

· Outsourcing & Outsourcing Professionals · Outsourcing in the Asia-Pacific region · Governance · Socially Responsible Outsourcing · Impact of Economic Slowdown on Outsourcing · Consumer Outsourcing · The 2008 Global Outsourcing 100 · Certified Outsourcing Professional (COP) Program · The Outsourcing World Summit Series · IAOP Chapters ·

Outsourcing & Outsourcing Professionals

Facts:

· The typical manufacturing company gets 70 to 80 percent of its finished product through its ‘supply chain.’

· Chief Information Officers (CIOs) at companies ranging from General Motors to Applied Materials to McGraw-Hill outsource as much as 50 percent or more of their IT budget dollars.

· Outsourcing spending in all business activities has continued to climb at 10 to 20% for the last decade – in good economic times and bad.

· More than 150,000 professional are involved in the $6 trillion global outsourcing industry.

· The number of outsourcing professionals within any company can range from tens to hundreds.

· More outsourcing professionals are seen on the provider side than on the customer side.

· The relative size of the organization usually correlates to the number of outsourcing professionals that they have.

Michael Corbett:

“As organizations increasingly make outsourcing an integral part of their operations, a new breed of professionals skilled in the design, implementation and management of these complex business relationships has emerged.”

“The real power of outsourcing going forward is going to be that it increases an organization's core capacity for change and growth. The business challenges over the next decade are going to be very different than anything we've seen so far and the companies that weave a powerful network of global partners through outsourcing will be the winners."


“As the larger organizations and customers mature in their processes, the number of professionals, the roles they play and how they are deployed in organizations will mirror what we are seeing in provider organizations.”

“Outsourcing has gone from being an intervention to today being an integral part of strategy in most corporations. For businesses to succeed, outsourcing professionals must be in a position to take a lead in working with senior management to set policy, identify the right opportunities, execute and govern these relationships, and ultimately assure quality results.”

“The landscape is shifting, with large U.S. companies becoming major ‘offshore’ players while offshore players are establishing U.S. footholds through acquisitions and by establishing their own facilities.”

“Now, as outsourcing becomes a "mature" practice, that recognition is gaining increasing currency in all circles. Outsourcing is maturing in every dimension. We are seeing more firms seeking out certified professionals to lead their efforts, as the decision making becomes more complex."

“Outsourcing has become a major structural tool for companies to help stabilize business in a world of fast and unpredictable changes.  For some it has become a tool for leading that change; for others, it is a means of adapting quickly to changes imposed upon them.”

“What I see happening is that companies are putting a tremendous effort into understanding the quality controls that their outsourcing providers have in place. Outsourcing providers are becoming very sensitive to that. They’re becoming better and better at making sure that the smaller companies they outsource to are equally stringent.”

“People are starting to realize that everything you do affects your brand. In outsourcing, you can’t sacrifice anything in order to get cost savings. Manufacturing is the canary in the cave. What manufacturers do flows out to consumers immediately. But you also can’t have a bad call-center experience. You can’t provide poor customer support. You can’t deliver bad printed statements. You can’t do anything that isn’t world-class, regardless of where you’re outsourcing from. It’s not just doing what’s right because it’s right. It’s good business.”

“As companies look to outsource more knowledge-intensive activities, the firms they are outsourcing to have to do a better job of retaining and attracting that kind of talent. It’s that whole value chain. People want to be part of high quality organizations that are supporting high-quality companies.”

“Increasingly, the leading outsourcing providers around the globe are imposing tougher standards on themselves for the same reasons big companies outsource: It makes good business sense. They know that they’ll get better results if their company is a high-quality operation. They want you to see that they are the best-in-class operator in their regions.”

“Outsourcing is increasingly recognized by businesses, universities and economists worldwide as a critical new management science. Not only are the latest developments in outsourcing helping companies to reduce costs, but they are spurring innovation and wealth creation at a time when we all really need it.”


Jagdish Dalal:
 

“Companies are past the basics of talking about outsourcing and offshoring. Executives understand outsourcing now and want to know how to effectively use it in their organizations.”

“The C-level suite is recognizing the importance of outsourcing. More and more outsourcing professionals will sit at the executive table with senior executives and define the very shape of business.”

“The global talent wars will further widen the economic gap between the cost of talent management and expected cost baseline.”

“The need for access to talent will lead companies to think about outsourcing as a means of accelerating innovation and gaining competitive advantage. This will lead to a transformation of the outsourcing profession where innovation will be valued much higher than pure cost savings.”

Outsourcing in the Asia-Pacific region
Michael Corbett:

“From transaction processing through the most sophisticated analytics and research, global corporations are increasingly turning to Asia to find the talent they need to succeed, making Asia the centerpiece of a global business restructuring as profound as any in our history.”

Malaysia has the opportunity to uniquely position itself as a destination of choice for outsourcing separate from China and India. Meeting standards and gaining professional certification will be important for providers to ensure consistent high-quality results.” 

“As Chinese service providers continue to increase their share of the global outsourcing industry, the U.S. will certainly be one of the most important markets in which they need to succeed.”

“In these challenging times, Chinese companies can catapult to a leadership position in this new world of outsourcing by focusing on developing deep outsourcing relationship management talent – something still lacking in even the most advanced areas of our field .”

“Asia’s role in the global outsourcing marketplace will be pivotal moving forward, despite the economic downturn, which is why it is so important for any global company to understand how outsourcing is changing and evolving in the region.”

Governance

Jag Dalal:

“Governance is a top concern of outsourcing professionals today. The lack of good governance is being recognized as the root cause that outsourcing outcomes fail to meet business expectations for buyers and providers of these services. Increasingly, companies understand the importance of the strong requirements of having good governance over outsourcing.”

Socially Responsible Outsourcing
Michael Corbett:

“With the shaky U.S. economy, presidential elections looming and a heightened awareness of how everyone’s actions impact the environment, outsourcing is poised to go politically correct in 2008.”

“Companies providing, using and advising on outsourcing will become known for adhering to and advancing the highest ethical standards, contributing to communities, bettering the environment, and expanding career opportunities and training for employees.”

“Big companies also want outsourcing providers to treat workers well, give back to the community, and use sustainable business practices to protect the environment. Going green is certainly hot today. Social responsibility also involves investing in people and treating everyone in an organization as someone who adds value.”

“Big companies are realizing that in the long run they enhance their own ability to attract the best employees by working with socially responsible outsourcing partners.”

“Probably the most direct driver of the trend toward socially responsible outsourcing right now is how important it is to be able to attract and retain talent all around the world. Doing business in ways that individuals admire builds your brand. It creates a positive image in the communities you operate in. It is going to put you in a better position to access the right people.”

Jag Dalal:

“One way providers can demonstrate sustained value for their clients is through greater attention to outsourcing's relationship to social issues.In today’s environment, social responsibility is not only good policy, it’s good business.It’sone categoryof risk that companies can directly influence through their own actions.”

“Outsourcing as a profession has reached a stage where fundamental civic responsibility issues such as socially and environmentally responsible outsourcing are a set of business drivers and not just talking points. IAOP believes that outsourcing as a newer profession has had a lead in thinking about these issues and outsourcing professionals will continue to provide leadership in this area.”

Impact of Economic Slowdown on Outsourcing
Facts:

· Major U.S. based outsourcing providers have predicted in their first quarter financial analyses stable growth for their businesses in 2008. However, experts believe that the uncertain business climate will slow corporate decision making.


Michael Corbett:

“With the U.S. economy slowing, the global outsourcing industry is likely to continue to see the 10% to 15% annual growth that it has experienced in recent years. When economic times get tough they outsource to cut costs and reduce their risk.”

“Much of the growth is likely to take place in “knowledge-centric activities” such as research and development, design, engineering, and analytics. The companies in general will be smaller over time, but the skills of the people will be what the customers really value the company for.”

“The most successful outsourcing providers will be those with deep expertise and strong collaborative skills, particularly if they are working with multiple partners. That becomes a competitive edge. It may not be as visible to the customer, but it becomes a very important differentiation.”

“With the many changes on Wall Street, Main Street and Pennsylvania Avenue, it is now more important than ever for outsourcing professionals to get involved and help shape the future of outsourcing as a management practice, profession and industry.”


“Challenges create opportunities. Outsourcing service providers are very aggressively examining their products and services to create greater value and increase market share in these times. Companies are recognizing they need to use this as an opportunity to strengthen relationships with their partners because each one of those partners will make them a better company.”


Jag Dalal:


“We believe that the companies needing to lower costs will explore outsourcing as a means of achieving that goal. Additionally, the uncertainty of economic conditions will encourage them to lower their “fixed” costs and seek a “variable” cost basis provided by outsourcing. Uncertain market conditions will lead companies to examine capital spending and look toward outsourcing to lower investment requirements. Thus, we predict a mixed business environment where demand is smaller due to decreased spending, but increased transaction activities increase due to businesses’ need to outsource more.”


“It is unclear how much impact the economic slowdown will have on outsourcing providers. Lower demand due to reduced budgets may be offset by an increased demand for the benefits of outsourcing. However, it is clear that providers will face a tougher negotiating environment where businesses will try to maximize their benefits from outsourced work. This, coupled with their own belt tightening will reduce margins from the outsourcing work and force providers to look for alternatives for increasing their profits.”


“Turbulent times require companies to manage operations with great discipline, and we can expect companies to plan, negotiate, implement and manage outsourcing agreements more efficiently and effectively. As these stakes get greater, companies increasingly expect outsourcing to be handled as a new management science based on standards, proven methodologies, and industry best practices.”

Small Business and Consumer Outsourcing
Michael Corbett:

“Consumers are increasing outsourcing a growing list of personal tasks ranging from math tutors for their children, to designers for wedding video graphics, to having local specialists put up and take down their holiday decorations, and — in what’s commonly called medical tourism — having both elective and life-saving procedures performed at fully-accredited hospitals in countries like India, Mexico and Singapore.”


”As with corporate outsourcing, consumer outsourcing is not simply about saving money — and we all know that trading off cost for quality is a no-win proposition. Consumers also are outsourcing to gain access to talent they just can’t find locally, to free their time for things more important, to focus on their personal core competencies, and, simply to deal with the volume of demands on their time, especially around peak periods like the holidays or one-time special events like weddings.”

“Everything we’re seeing right now suggests that consumer outsourcing is poised for rapid growth over the next few years.”

“The No. 1 advantage of outsourcing effectively is the ability to free your time to concentrate on more important aspects of business ownership.”

The 2008 Global Outsourcing 100
Facts:

· Forty-four percent of the Leaders are based outside the U.S.

· Five of the top ten companies are based in India

· As a snapshot of the industry, the Leaders list reveals underlying trends in the marketplace.

o Revenue in this elite group grew by 24% in 2007, compared to 16% growth in the previous year.

o On average, a company on the list had $1.7 billion in annual sales and engaged 27,000 employees around the world.


Michael Corbett:

At a time when companies that outsource are scrutinizing their providers more closely, the criteria our judges used in this ranking are increasingly important in differentiating the top players in the industry. The Global Outsourcing 100 is a comprehensive and useful guide to help companies research and compare service providers they are considering engaging or expanding outsourcing relationships with.”

Jag Dalal:

“The power balance in the outsourcing industry is shifting. Global competition in outsourcing is intensifying and that was reflected in this year’s ranking with companies from 19 countries vying for recognition.”


Certified Outsourcing Professional™ (COP) Program
Facts:

· More than 150 professionals from companies around the world have earned the designation since it was launched by IAOP in 2006, with several hundred more in the process of becoming certified.

· An online version of the course also is offered through IAOP’s Academic Alliance Partner, Syracuse University

Christina Powers, Senior Managing Director, Training and Certification:

“As interest in the COP certification continues to grow globally, we’ve expanded our COP Master Class training to meet the needs of professionals from around the globe to pursue industry certification.”

“The new COP Bridge Program initiative builds a bridge between accredited courses and the COP program. t will provide professionals with access to get the needed training points for certification and recertification, while also creating a connection to other valuable outsourcing programs.”

“The COP certification has now reached a critical mass and matured to the point where the COP Bridge Program is needed and being sought. Many organizations have requested that IAOP create this type of program and now we are ready to open the floodgates.”

Jag Dalal:

“An increasingly self-service oriented customer model will be further fueled as more organizations implement outsourcing centers of excellence and as more professionals gain certifications.”

The Outsourcing World Summit® Series
Michael Corbett:

“The Outsourcing World Summit is the place where valuable outsourcing relationships begin, and hundreds of million of dollars of business deals are initiated and made. More than half of Summit delegates play an organization-wide role in their company’s outsourcing decisions and the average customer-side delegate is responsible for $60 million of annual outsourcing spending, so attending this event can have a real return on investment.”

“The real power of outsourcing going forward is going to be that it increases an organization's core capacity for change and growth. The business challenges over the next decade are going to be very different than anything we've seen so far and the companies that weave a powerful network of global partners through outsourcing will be the winners."

“Leading global companies understand that in these turbulent times, outsourcing can give them a competitive advantage if done properly. Now is the time for professionals to get involved with shaping the future direction of this industry.”

“The one thing the outsourcing industry can not afford to do in today’s environment is to stop investing in professional expertise and in learning how companies can reach their full potential.”

Jag Dalal:

“Companies are past the basics of talking about outsourcing and offshoring. Executives understand outsourcing now and want to know how to effectively use it in their organizations.”

“The European Outsourcing Summit will explore the differences between creating and implementing outsourcing strategy in the European marketplace. The most successful firms are thinking globally but acting locally.”

IAOP Chapters
Facts:

· IAOP has 40 current and forming chapters across the world

Michael Corbett:

 “IAOP’s vision is to build a global outsourcing industry based on common professional standards, excellence and ethics.  Through our newest chapter in Beijing, as well as our other chapters in the region, Asian companies can catapult to leadership positions in this emerging new world of outsourcing.” 

“Outsourcing is accelerating across Asia. IAOP's programs, including its ever-expanding chapter network, are a great opportunity for professionals to share their expertise, establish themselves as thought leaders and join together to advance and advocate for the profession and for the industry.”

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