More outsourcing projects could end in failure if end users continue to push through higher-volume, low-cost contracts, a UK trade body has warned.
The National Outsourcing Association (NOA) claimed in its quarterly index that the UK outsourcing market grew a robust eight per cent last year.
Based on interviews with 50 outsourcing professionals, the NOA found that the IT outsourcing side of the market grew by 12 per cent while business process outsourcing grew at a more muted six per cent. Confidence among suppliers was also up, with 40 per cent saying they were more confident in the market than last year.
However, the NOA tempered its optimism by warning that the falling price of contracts could hamper the success of outsourcing projects in this country.
Martyn Hart, chairman of the NOA, said: “Outsourcing has traditionally been seen as a cost saving mechanism for business, so in times of economic turbulence it is not surprising that the industry is continuing to grow.
“However, with the increased pressure on companies to cut costs many are pushing through higher volume low cost contracts, over shorter time frames, which more often than not sets the outsourcing contract up to fail."
Hart stressed that it is more important than ever that contracts work for both parties and that best practice be followed from the outset.
Some 18 per cent of outsourcing contacts decreased in length over the last 12 months, the NOA found. But during the same period 20 per cent of respondents said they have seen the value of outsourcing contracts increase, with just 10 per cent claiming they have fallen.
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