EquaTerra Finds Outsourcing Demand Slowed

July 17, 2006 (PLANSPONSOR.com) - EquaTerra's 2Q06 Outsourcing Pulse Surveys found only a slight growth in outsourcing demand levels from 1Q06 and a decrease in demand over the year.

According to an EquaTerra press release, the surveys also revealed buyer challenges. EquaTerra advisors cited the problem of finding service providers that can meet their needs and ongoing challenges with transition and outsourcing management and governance, and service providers said building solid and accepted business cases was a problem.

Other key study findings, according to the release, include:

  • Human Resource Outsourcing (HRO) slipped to the third-most-outsourced process, replaced by IT Outsourcing (ITO) and Procurement, respectively, according to EquaTerra advisors.
  • Cost reduction was cited as the leading reason buyers outsource, though process improvement followed strongly and the focus shifted to more strategic work, particularly for Business Process Outsourcing (BPO) efforts, according to both advisors and service providers.
  • Pricing competitiveness was generally stable quarter over quarter for ITO, but less so for BPO, as cited by both advisors and service providers.
  • Contract value held steady, though more so for BPO than ITO, according to advisors.
  • The number of service providers expecting recompetes/renegotiations to increase over the next quarter declined, but still came in at over 25% of respondents.

Anyone interested in obtaining reports detailing the survey findings will be able to do so in late July by sending an e-mail to research@equaterra.com .