Dun & Bradstreet Survey Finds 50 Percent of Outsourcing Relationships Worldwide Fail Within Five Years; Principal Cause is Poor Planning for New and Evolving Business Process
MURRAY HILL, N.J.–(BUSINESS WIRE)–Feb 24, 2000
Dun & Bradstreet’s Barometer of Global Outsourcing, that reported on the rapid growth of outsourcing around the world, also uncovered unexpectedly high failure rates. Between 20 and 25 percent of all outsourcing relationships fail in any two-year period. Half will fail within five years.
“Nearly 70 percent of respondents reported the relationship failed because the supplier didn’t understand what they were supposed to do.” said Michael Flock, President of Dun & Bradstreet Asia-Pacific, Latin America and Receivable Management Services. “In addition, high costs and poor service were also cited.”
“It has been our experience that the application of sound business principles to the outsourcing process can improve results dramatically,” Flock added. Based on Dun & Bradstreet’s success in business outsourcing for credit, receivables and information management, Flock offered guidelines for setting up a successful program:
— Establish precise, measurable objectives
— Document expected improvements for your core business as a result
— Create a scorecard that quantifies each objective
— Implement a regular review process with internal personnel and
the outsourcing vendor
— Have a champion for the project in-house to ensure it receives
the needed attention
Methodology of Barometer of Global Outsourcing Survey
The Dun & Bradstreet Barometer of Global Outsourcing indicates that worldwide expenditures on outsourced activities in 2000 will grow more than 25 percent over 1999 levels. The Barometer was developed from interviews in June 1999 with more than 2,200 organizations drawn from D&B’s global database of more than 57 million companies. Respondents include large and small companies, banks and institutions. Outsourcing was defined as the use of outside partners to perform tasks that traditionally would have been performed inside the company.
Dollar amounts are US currency unless noted otherwise.
About Dun & Bradstreet
Dun & Bradstreet, a company of The Dun & Bradstreet Corporation (NYSE:DNB), is the world’s leading provider of business-to-business credit, marketing and purchasing information and receivables management services. The Dun & Bradstreet Corporation also includes Moody’s Investors Service, the leading provider of credit ratings, research and analysis covering debt instruments and securities in the global capital markets. The Dun & Bradstreet Corporation, based in Murray Hill, N.J., employs approximately 11,500 people in 37 countries with majority-owned company entities, and generated 1998 revenue of $1.93 billion. Additional information about Dun & Bradstreet is available at http://www.dnb.com.
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