Recent Study: Personnel and Accounting Departments Also Potential Outsourcing Candidates

Düsseldorf/Osnabrück, March 6, 2012 – German companies see great potential in outsourcing for the future. Aside from the areas of facility management, security services and telecommunications, personnel and accounting areas are also frequently to be externally handled in coming years. But: Companies will only be satisfied with their outsourcing decisions if they can scrupulously prepare and implement the process from its concept all the way to its realization. That has been the result of a joint study by the corporate group buw, the purchasing consultancy Kerkhoff Consulting, and the Kerkhoff Competence Center of Supply Chain Management at the University of St. Gallen. For this study, 150 German companies were interviewed from all sectors of the industry.

In the next five years, 95 percent of the companies interviewed will no longer have their facility management carried out internally; 86 percent want to rely on external security services. Telecommunications is to be outsourced for 73 percent of those interviewed, and logistics for two thirds. One half wants to say goodbye to their internal IT departments. And within the next five years to come, still two of five of the interviewed companies want to put their personnel and accounting departments into the hands of outsiders. Almost none (4 percent) would want to externalize research and development; and just as little their sales (8 percent) or marketing (15 percent) departments.

"Having their facility management or security handled by external partners often no longer entails any major discussions in corporate management today", says Andreas Pasing-Husemann from the buw corporate group. "Frequently, the subjects of personnel and accounting had not yet been touched upon in recent years. Yet, these are also processes which are not part of the core competence of every enterprise and thus do not contribute to their added value. Accordingly, it is to be put to the test whether there are third parties who can provide these services more professionally than had been internally possible until now."

Outsourcing for quality reasons increases satisfaction with the decision

Altogether only 60 percent of the companies interviewed stated that increasing the quality had been the motivation for outsourcing. For nine of ten enterprises, the decision had been exclusively due to or at least a component part of cost reduction programs. "German companies are learning slowly only that the outsourcing of business processes is not only used for reductions of personnel or material costs", says Professor Erik Hofmann from the University of St. Gallen. "The motivation should much rather be to concentrate on what a company is actually capable of and what thus is a central component of its added value. Concentration on strength will promise growth – not the belief that they themselves can do everything on their own."

The five companies ranking highest in the interviews in terms of utmost satisfaction with their outsourcing decisions had not decided merely for reasons of costs on the outsourcing of processes to external service providers (business process outsourcing). The companies indicated that their most important motivation had been an increase in the quality of the corresponding service. Even in other aspects, their statements frequently did not correlate with the rest of the interviewed companies: Particularly satisfied companies consider a clearly defined system for the evaluation of services to be more important than the others interviewed; also, they had more frequently taken measures for the preparation of outsourcing activities, and they are using a special control unit for outsourcing decisions. Only 18 percent of the remaining companies are using such a control unit.

Potentials will be lost if purchasing departments are only operatively integrated

A total of 91 percent of the companies interviewed consider it important or very important that purchasing will be tied into the outsourcing process as a support department. Jointly with corporate management or the appropriate department heads, buyers will select the new service providers. Moreover, 86 percent of the companies consider it important or very important to include buyers in the operative decisions. "Unfortunately, that's frequently completely different on a strategic level", says Oliver Kreienbrink, partner at Kerkhoff Consulting. "It's still all too rare that buyers are tied into the process from the start, and valuable potential is thus given away. Because only if they are right at the table during the strategic decision, they will be able to provide impetus and stimulus for the selection of service providers. And only then will companies be able to increase their quality in outsourced processes and also lower costs at the same time."