February 20, 2006
British and Ireland firms outsource more: Capgemini study
A report by Capgemini's European CIO survey has revealed that companies in Britain and Ireland outsource 8 percent of IT operations, which is well above the European average of only 2 percent. The study also sees an increase in British and Ireland offshore outsourcing to 24 percent, while the European participation is likely to increase to only 5 percent, by the year 2008.
Capgemini also opines that the prime motivation behind the British and Irish outsourcing is cost reduction, and not reinvestment of their savings in projects that would lead to revenue growth. By reinvesting savings, companies can reap a 10 percent higher rate of productivity, according to Capgemini. This is the most important reason for US companies forging ahead in productivity growth by 1.8 percent in 2005, compared to 0.9 percent in Ireland and Britain. ElectricNews reports:
According to the survey, 87 percent of IT spending is on relatively low-value, back office tasks such as support, infrastructure management, application management, testing and roll-out. Only 5 percent is spent on strategy and planning and just 8 percent on conceptualisation and design.
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