CFOs struggle to measure outsourcing ROI
/According to an article in Accountancy Age, many CFOs can't with any degree of certainty, calculate the value of their outsourcing contracts. According to the study by outsourcing firm Cognizant Technology Solutions, only half of CFOs have even tried to calculate how much these contracts contribute to the bottom line, and of those that did, only 19% were "very confident" in their calculations.
An excerpt from the article:
Businesses in the UK spent 12% more on outsourcing contracts in 2008 than in 2007 according to the National Outsourcing Association and Cognizant’s research found that more than half of respondents expect to see ROI on their outsourcing investments within the first year.
But CFOs say assessing the value of these contracts is difficult because that value is not found in a one-time cost saving a fact borne out by the finding that, of the CFOs that cut back on their outsourcing, 78% cite “unclear value for money” but could not quantify this further.
“Senior executives appear to be making outsourcing decisions based on shot-term cost cutting, but outsourcing’s impact stretches well beyond the in i tial labour, skills and cost advantages,” says Sanjiv Gossain, Cognizant’s managing director for the UK and Ireland.
