WESTBOROUGH, Mass. (HedgeWorld.com)–Businesses that outsource labor to other locations might save less money than they expect but could benefit in other ways that may be as important or valuable as cost savings.
That finding was among the conclusions made by the Tabb Group after interviewing senior-level executives responsible for selecting offsite providers and managing outsourcing relationships at 14 major financial firms.
The Tabb Group provides technology and strategic issues consulting to financial services firms.
The executives reported that while cost savings and quality levels achieved in outsourcing were not always as high as they had anticipated, they did derive other gains, such as labor pool flexibility and an increased ability to focus their in-house resources on business solutions.
The Tabb Group found that the labor market in India is tightening, as increased local demand has made programmers a valuable commodity. To maintain quality levels in an environment of increasing turnover, U.S. firms are now negotiating up-front the right to interview labor providers and to have final say over assigned labor resources.
Firms that outsource have taken to diversifying geopolitical risks by working with vendors in different countries, setting up “captive” workforce companies abroad or investing in foreign companies to capitalize on the advantages of global workforces, the survey reported.