The majority of Australian businesses in the private and public sector lack the ability to link outsourcing with business growth and instead use outsourcing only as a cost-cutting measure, according to a new survey conducted by business process partnering company UCMS.
According to the survey of 134 large Australian companies, titled the 2005 BPO Barometer, only nine per cent understood the term business process outsourcing and a further 54 per cent indicated cost reduction and finances are the key focus when selecting an outsourcing provider.
John Paddick, CEO of UCMS said Australians are working in an environment of 'business Darwinism' where only the fittest and most sound will survive.
He said this more evident due to Australian businesses only taking a cost cutting approach to outsourcing and not using a sustainable long term approach.
"Unlike mature international business markets in the US, Europe and the UK, Australian private and public sector organizations are continuing to adopt a siloed cost-cutting approach to outsourcing," Paddick said.
"From the results of the 2005 BPO Barometer, it's hard to understand why Australian companies are not across the benefits of turning business process over to firms who specialize in taking the pain out of non-core business process management."
Of the public and private firms interviewed, 78 per cent said outsourcing was not a key direction in business operations and 54 per cent stated cost reduction and finances are the key focus when selecting an outsourcer. A further 36 per cent of private and 27 per cent of public sector organizations expected more than 20 per cent of savings in back office processing costs from outsourcing.
An additional 29 per cent of respondents believed increased costs will result from outsourcing and 22 percent feared loss of control will result from outsourcing a service.
However the siloed approach to outsourcing is declining. The survey found 43 percent of all respondents wanted to integrate their outsourcer at all levels of the business and 12 percent wanted the outsourcer to work within their business to push for growth.