Cost not a key priority in outsourcing professional services

New Zealand survey

Cost not a key priority in outsourcing professional services

15 June 2015

When businesses outsource work, cost is not the key driver, according to Grant Thornton’s latest International Business Report (IBR) survey.

Human resources, payroll and accounting are the most common services that are outsourced and many companies engage external specialists to execute these cost effectively.

Matt Parkinson, Partner, Privately Held Business at Grant Thornton New Zealand, said that it could easily be expected that cost and the providers’ technical expertise are the most critical success factors in outsourcing relationships.

“However, to make these relationships work, the IBR survey reveals that communication, reliability, trust and other non-technical skills count just as much - if not more – than harder factors such as specialist capabilities.

“Although still rating highly, the cost of services isn’t the most important criteria when selecting an outsourcing provider. For business leaders, particularly in New Zealand, cost rarely ranks as a top priority.”

When asked which criteria was most important when selecting an outsourcing provider, New Zealand business leaders surveyed said that a track record in servicing similar organisations (46%), trusting the supplier (36%) and understanding their businesses (36%) influence their decisions the most. The cost of services ranked a distant fourth in New Zealand (18%).

“Naturally, providers need to deliver on time and to a high standard and they also need to help clients remain compliant with regulatory requirements, which explains why trust is such an important factor for businesses.

“Communication is integral to building high levels of trust, and responses in the IBR survey demonstrate how vital this is. Participants ranked communication considerably higher than the provider’s project governance and resource management experience,” he said.

A staggering 91% of New Zealand business owners stated that good communication is a key driver that contributes to a positive outsourcing experience compared with the global average of 88% per cent. New Zealand also ranked 22 out of 35 countries in this area; 100% of participants in the top seven countries deemed communication as an essential part of distinctive client service.

Parkinson says that among other things, good communication practice means being ultra-responsive, and being proactive is another part of the trust and reliability equation.

Three quarters of business leaders around the globe say it’s important that their lead outsourcing provider is able to meet with them at very short notice – within 24 hours – should an issue arise. And companies want their providers to be on the lookout for ways to streamline processes. Good providers also listen to clients to improve their service.

“The digital age has delivered tougher competition and businesses increasingly rely on their suppliers – including their outsourcing providers – to help them design better business processes.

“The criteria and skills that clients judge their outsourcing providers on is clearly evolving. Providers must adapt to create a new point of difference in an increasingly competitive market,” says Parkinson.

Click here to download a full copy the International Business Report, “Outsourcing: Beyond technical expertise”.

Issued on: 15 June 2015

Notes to editors:

IBR 2015 methodology

The Grant Thornton International Business Report (IBR) is the world’s leading mid-market business survey, interviewing approximately 2,500 senior executives every quarter in listed and privately-held companies all over the world. Launched in 1992 in nine European countries, the report now surveys more than 10,000 businesses leaders in over 36 economies on an annual basis, providing insights on the economic and commercial issues affecting the growth prospects of companies globally.

The data in this report are drawn from 2,571 interviews with chief executive officers, managing directors, chairmen and other senior decision-makers from all industry sectors in mid-market businesses conducted in February 2015.

Responses are weighted by economy GDP.

About Grant Thornton International Ltd*

Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, actionable advice through a broad range of services. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to solve complex issues for privately owned, publicly listed and public sector clients. Over 38,500 Grant Thornton people, across 120 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.

Grant Thornton International is a non-practicing, international umbrella entity organised as a private company limited by guarantee incorporated in England and Wales. References to "Grant Thornton" are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients.

*All references to Grant Thornton International in the press release and this “Notes to editor” section are to Grant Thornton International Ltd. Grant Thornton International Ltd is a non-practicing, international umbrella entity organized as a private company limited by guarantee incorporated in England and Wales.

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