12/05/2010
By Scott Thompson
Seventy per cent of UK retailers have been disappointed with the quality of work provided by offshore outsourcers, according to research released by Valueshore Spain, the Spanish Government-backed group of IT consultancies.
Despite these concerns, 78 per cent of those questioned admit they still use day rates as the main method to calculate IT outsourcing costs, ignoring issues such as quality of work and continual business innovation.
The survey of 200 UK IT directors, commissioned by Valueshore and conducted by Vanson Bourne, highlights a worrying trend which retailers simply can't afford to fall into, argues Daniel Naoum, co-founder, Valueshore Spain. "As multi-channel retail developed, more and more retailers began doing business internationally. Of course their IT systems, which control everything from VAT to stock and supply, have had to grow with them. As a result, retail IT has become more complex so it's no surprise that the demand for outsourcing is there - 62 per cent of retailers plan to invest in offshore outsourcing over the next two years. However, taking a cost-focused approach could have a detrimental effect on the quality of work received. Retailers expecting efficient, easy to manage IT could end up with stock in disarray and PoS systems crashing as the IT fails. Simply put, the cheapest option doesn't always provide the biggest overall savings as quality concerns can often result in more management time being required, along with increased travel and other hidden costs."
"The modern retailer, having made it through the recession, must plan for the future," says Naoum. "Yes immediate cost-savings are attractive but they should not be the only factor considered. The perfect IT outsourcing destination will have a proven IT track-record in retail, with leading consultancies having hubs in that country. There should be plenty of examples of big-name brands across a range of industries having benefitted from that country\\'s IT skills. For example, Spain is becoming a major player as the likes of Zara become retail leaders having taken advantage of an innovative IT infrastructure at start-up. If handled correctly, outsourcing can play a major role in this kind of success. The retail industry has undergone dramatic changes with things like online retail becoming a core part of the industry. It's time the focus of outsourcing adapted to suit that. Both the retailers and the outsourcers working with them need to ensure that IT projects are planned for efficiently and carried out seamlessly. Only then will the full benefits of outsourcing be felt."
