But now, in a day and age where business responsibilities and requirements can compound at the blink of an eye, it is no surprise that -- be it the lure of promised improved efficiency, decreased time restraints or better cost effectiveness and decreasing staff costs -- outsourcing is fast becoming something many larger-sized organisations have to consider at one point or another.
A white paper by research firm IDC published in October 2004 highlights the plight of many businesses choosing to outsource. It says companies are looking for significant cost savings, the freeing up of energy so they can focus on their key area of expertise, and increased access to skills and technological innovations they may otherwise be oblivious to. "Companies in the mid-tier (100 to 1000) employees have noted that improving operational efficiencies and lowering costs have become imperative to maintaining a competitive edge," says the paper (written after outsourcing projects were researched over a five-year term).
It says the success of outsourcing projects within larger companies -- the main users of outside companies -- shows that an average cost saving of up to 28 percent annually can be been seen when outsourcing is done in the right way. This is encouraging smaller businesses to consider this new way of dealing with company operations.
One larger company that has embraced outsourcing is Sodexho. Following the successful introduction of telecommunications outsourcing with Telstra on an Asia-wide scale, Sodexho took its outsourcing one step further -- awarding IBM a multi-million dollar five-year business consulting, e-business hosting, and support services contract for its financial and accounting systems and the migration of its SAP infrastructure to an e-business hosting environment managed and supported by the global technology company.
Since starting the project, the company says it has recognised improvements in the speed of financial and accounting role performance. Sodexho has also seen better concentration on the competencies of its core business skills, enhancing client services and allowing for better management of costs.
Sodexho is one of the world's largest service providers. Its core business is in the food and management services industry, in which they are ranked number on in the world. They have a presence in 72 countries, including Australia where they have 10,000 employees and six different corporate entities. Among their clientele are the Australian Defence Force, Ford Australia, and Telstra Stadium. They also catered for the Sydney Olympics.
Sodexho's director of finance and information systems for Asia-Pacific, Garen Azoyan, says the IBM SAP project rolled out in Asia-Pacific during 2004 will stand as a model for other major Sodexho locations such as Europe, where the company has a large presence.
"Sodexho first started looking at outsourcing our human resources, payroll finance, and purchasing following a series of mergers and acquisitions that occurred over the last few years," Azoyan says. "We had different legacy systems in each organisation. We decided to introduce one common platform, one application used everywhere in our Asia-Pacific businesses so we could shift our resources to our core business activity and shift our fixed cost to variable."
Language was also a barrier as far as finance reporting and process streamlining in offices in China, Japan, Hong Kong, Singapore, Malaysia, and South Korea went. So a system had to be chosen that could cross cultural divides and be implemented on a global scale.
