Stop Leaks from Draining Value
June 11th, 2010
By Lynn McNeal, Partner, TPI; and Gerardo Fernández, Senior Advisor, TPI
Outsourcing can provide many benefits to businesses – including more flexibility, improved service and reduced costs – but it almost never provides these benefits at the levels that are expected. The most successful outsourcing programs typically reach only 95 percent of the service levels and cost savings that were expected – and were contracted for. Less successful programs may miss their targets by 30 percent or more.
The difference between the value and services that are contracted for in an outsourcing agreement, and those that are actually delivered, is known as value leakage. A company’s size and where it is headquartered geographically aren’t major factors it its risk for value leakage. We have seen firsthand that some midsized, Latin American companies are global leaders in managing outsourcing relationships and maximizing the …
