Cost cutting still driving outsourcing decisions   11th December 2006 Research from the National Outsourcing Association suggests that despite repeated protestations from end users that suppliers are chosen based on their ability more than anything else, the reality is that 49% of respondents chose cost as the reason why companies outsource to a country other than India , whilst only 14% focused on the calibre of workforce. The research also showed that 76 per cent of respondents cited China as the destination that is most likely to challenge India 's dominance over the next five years, largely due to cost and capacity. Furthermore, when an outsourcing project is put out to re-tender, 60 per cent of respondents felt that the best outcome for the client, and the one that does least damage to the client organisation, is to re-select the incumbent supplier. Martyn Hart, chairman of the NOA Summit commented: “This research reflects the fact that there is a whole host of new supplier locations that many end users are starting to consider. Outsourcing has become a truly global market, and this can only be a good thing for end users trying to find the best service in terms of both cost and service levels. Cost-cutting remains a driving factor behind many outsourcing deals, but it is significant to note that whilst at one point in time it may have been the only reason to outsource, the knowledge that surrounds the outsourcing industry is far greater now, and people understand that they need to look further than just cost. Previous surveys have shown 80% of end users decide on cost, it is noticeable that this figure is slowly declining as both service recipients and services providers understand that outsourcing is more than just about cost saving”.
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