RETAIL PUTS OUTSOURCING TO THE TEST
23/04/2010
In our second annual look at the process of sub-contracting whole operational areas of a retailer's business we have, paradoxically, extended our focus beyond Offshore outsourcing, to encompass the trend towards `nearshoring'

Fuente:  www.retailtechnology.co.uk  Fecha: 23.04.2010

Martyn Hart, chairman of the National Outsourcing Association told Retail Technology that, like many other sectors, the retail industry has been hit hard by 2009's global recession and as the general election soon approaches, retailers will look for other ways to survive such difficult times. " Offshoring and outsourcing business processes like IT HR [human resources], accounts etc. will therefore continue to prove a popular option throughout 2010 for the many retailer shaving to make savage cuts in order to stay on top and compete on a global scale," he said.
But a recent survey found 75% of UK organizations were 'disappointed' with quality of work provided by offshore outsourcers. Yet despite concerns, two-thirds of organizations are still planning to offshore IT projects over the next couple of years, according to the 200 UK IT directors surveyed by independent market researcher, Vanson Bourne on behalf of IT consultancy group, Valueshore.
"While many retailers outsource typical areas such as accountancy, customer services and back-office processing, there has also been a rise in outsourcing e-commerce software development and website management, especially as interests in cloud computing has grown' observed Hart.
"But the recession will come to an end and having a competitive retail landscape will likely stimulate an inward flow of investments from BPO [business process outsourcing] companies setting up and operating within the UK, such as the recent acquisition between Intelenet Global Services and First Group."
Interestingly, 94%% of the organizations surveyed admitted that, by focusing too much
On cost, they were increasing the likelihood of their IT projects failing to meet their requirements and needing more management time. This is born out by the comments of
SanjivGossain, UK managing director of Cognizant Technology Solutions, who said: "From our perspective,we've definitely found that companies tend to slow down decision making in times when cost pressures really come to the fore.
They re-evaluate and realign their investment from projects that prioritize longterm transformational benefits, to those with immediate cost savings. The ideal scenario of course is to plan IT projects that can deliver both."And he added:" What's certain is that retailers now want much tighter control of any IT projects they embark on."
Daniel Naoum, co-founder of Valueshore Spain advised: "Businesses need to ensure they scope out their outsourcing projects more carefully, otherwise they risk their future success. Outsourcing is undoubtedly a great way for many businesses to cost-effectively gain access to the IT skills they need, so they need to constantly evaluate whether they are receiving value for money from the destination or provider they have outsourced to".

RETAILERS LOOK OVERSEAS IN RECESSION

Paul Mason, chief executive of offshore outsourcer, PMC believes an uncertain year for the UK makes taking the offshore option a sensible choice for retailers. However he cautions against taking a 'generic' rather than 'retail-focused offshore route."
Budgets were cut last year in anticipation of tough times. And the outlook for this year is uncertain, as tax increases kick in and the new government starts tackling the country's huge debts. As a result, cost savings made last year will need to be locked in. However, some of the work deferred from last year may now need to be done. Therefore, the need for lateral thinking about how to do more for less may intensify rather than lessen," he said.
"Tempting though it may be to sit and wait for business to improve, I think that's the wrong choice. Drive cost efficiencies. Make step changes in your cost base. Think laterally. To support an existing solution or develop a new solution think offshore."
But he added:" When you're dealing with a different country and a different culture thousands of miles away you have some learning to do. And the learning is not one-way- there must be mutual understanding."