Alsbridge Report: Low Operating Margins on the Outsourcing Industry Contribute to Innovation Crisis

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Outsourcing advisors continue to grow in importance.

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We believe that relationship building among all parties involved is essential

A report released today by Alsbridge found that the operating margins of the leading U.S. outsourcing providers rapidly declined from an average 17 percent in 1974 to about 6 percent today and says competition from international providers, economic instability and strict purchasing processes share part of the blame.

"The operating margins of the leading outsourcing providers over three decades points out a disturbing reality -- providers are at their breaking point," says Ben Trowbridge, Alsbridge CEO.

"Poor communication and a lack of trust between buyers and providers are real and are keeping the industry as a whole from reaching its full potential. We have also discovered that buyers are unhappy with the arms-length RFP process and that there is usually no effective collaboration involved to sustain these deals."

"We believe that relationship building among all parties involved is essential," he says.

The research says that several trends will continue to define the industry and they include the demand for professional outsourcing advisory services. Because outsourcing deals are increasingly becoming more complex, the findings suggest that companies will need to enlist the advice from functional area and industry experts.

"Almost any business function can be outsourced," says Trowbridge. "Businesses that rationally and prudently evaluate outsourcing tend to gain a unique competitive advantage. When outsourcing is done right, it will be beneficial to everyone involved, and we have taken great care to operationally provide the best path to win-win outsourcing."

The full report is available at http://www.outsourcingleadership.com, Alsbridge's monthly e-newsletter that covers outsourcing, shared services and offshoring topics.

About Alsbridge

Alsbridge is the award winning global advisory firm, providing unbiased advice and assistance on outsourcing, shared services and offshoring. Alsbridge consultants bring extensive vertical industry expertise and a practical knowledge of all areas within information technology and business process outsourcing. The firm's proven methodology incorporates proprietary collaborative sessions, bringing together executive teams from both the client and the provider in an environment that fosters collaboration. Alsbridge supports its recommendations and assistance through significant investments in proprietary benchmarking and ongoing research within the industry. For more information, visit http://www.alsbridge.com.

Reader Contact Information:

North America

3535 Travis Street Suite 105 Dallas, TX 75204

Tel: +1 214 696 6410, Fax: +1 214 239 0698, http://www.alsbridge.com

Europe and Asia:

Alsbridge Europe Ltd., 22-24 Ely Place, London, EC1N 6TE, UK

+44 (0) 20 7242 0666 +44 (0) 20 7242 0667, http://www.alsbridge.com

Alsbridge and SAS are trademarks of Alsbridge, Inc. and Alsbridge Europe, Ltd.

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Jeff Anderson    

214-415-7559

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