Ernst & Young: Europeans more open to outsourcing

by Editor 9/1/2008 3:22:00 PM
A new Ernst & Young study, completed last month, shows that 70 percent of European firms use outsourcing. An earlier research on European firms’ openness towards outsourcing, conducted by Gartner, indicated that Europeans had a strong preference for local vendors. The firms’ reluctance is partly caused by the strict labour laws in countries such as France and Germany.

Cost savings are still the main reason for outsourcing and, according to the study authors Thierry Muller and Paul Young, they are not easy to achieve. The authors said:

“In order to achieve an overall reduction in costs, employers must be able to either succesfully reallocate internally those staff whose operations have been externalised, or carry out redundancies. The options available to employers vary according to each country’s legal framework. European countries such as France and Germany have less room for maneuver than countries such as the UK, where labour laws are more liberal.”

The French and Belgians, however, are more open to outsourcing a wide range of roles, while the British tend to outsource only a few standard functions.

Only 49 percent of the respondents named cost savings and better productivity (revenue per employee) as the advantage outsourcing brings to their business. About 33 percent cited better quality through use of specialized skills as the main advantage.

The study further states: “French companies attribute less importance to cost-saving benefits, with improvements in quality and strategic organization being the key advantages identified. Belgian companies are also strong proponents of the improved quality brought by outsourcing while, in the UK, quality considerations are rated on a par with cost savings.”

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