ZEW's IKT Survey among 4,300 Companies – Retail Leads in Business Process Outsourcing
ResearchOn the whole, 58 per cent of German companies partially or entirely outsource business processes such as, for instance, human resources or accounting to external service providers. First in line are retail businesses, of which 67 per cent outsource business processes, followed by technical service providers (65 per cent) and wholesale businesses (58 per cent). In the automotive manufacturing sector, the share of companies that outsource business processes to external providers is the lowest with approximately 40 per cent.
All in all, the service sector shows a slightly higher outsourcing intensity. 59 per cent of the companies in this sector outsource business processes; in the manufacturing industry, however, this is the case for only 54 per cent. These are the findings of a representative survey among 4,300 companies of the manufacturing industry and selected service sectors (trade, transport and postal services, banking and insurance, EDP and telecommunications services, technical service providers and other corporate service providers) with at least five employees. The survey was conducted by the Centre for European Economic Research (ZEW), Mannheim, in the beginning of 2007 with financial support of the Landesstiftung Baden-Württemberg.
The outsourcing intensity varies in the different business divisions. While the outsourcing of accounting activities and human resources seems to be very common (43 or 27 per cent), marketing, procuring, customer service and sales are allocated to external service providers rather rarely. In all considered business divisions, service providers outsource business processes more frequently than the manufacturing industry.
The outsourcing intensity declines with the growing size of the company. While 62 per cent of smaller companies in the service sector with less than 20 employees outsource business processes, the outsourcing rate for companies with 20 to 249 employees lies at 48 per cent and for bigger companies with more than 250 employees at 32 per cent. With a growing number of employees the manufacturing industry equally shows a declining outsourcing tendency.
When asked for the reasons of business process outsourcing, 83 per cent of the outsourcing companies named the concentration on core competences of a business the outsourcing motive. However, cost savings and process optimisation played a significant role to more than 50 per cent of both kinds of companies. Considerable differences between service sector and manufacturing industry primarily exist in terms of cost savings. This motive rather encourages manufacturing businesses (66 per cent) than service providers (58 per cent) to outsource business processes.
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