Outsourced companies lack skills to tackle failures, Deloitte said

Businesses are turning to outsourcers rather than developing in house skills

Outsourcing

Companies are increasingly relying on outsourcers to provide services to their business, which is resulting in a higher rate of failures compared to territories that have the in-house skills to manage the relationship and deal with threats, a report by Deloitte has revealed.

Only 11% of businesses feel they have the resources to deal with failures by outsourced providers, leaving a huge gap for problems to occur, the report explained.

"This year's survey results demonstrate that third parties are increasingly relied upon, with this trend likely to increase," Kristian Park, global extended enterprise risk management partner at Deloitte said. "Unfortunately, management processes and technology that support the oversight of these relationships are not keeping up, creating an 'execution gap'. Whilst there is clear organisational commitment to address this, it is not being matched by the right skills, processes and technology to achieve intended results."

"Whilst both political and economic uncertainty has slowed investment and subsequent progress, there is greater appreciation of the related risks," Park added. 

He went on to say that companies are expected to start addressing the issues in the new two years by building a a framework for better managing risk, although some companies may set it at a lower priority that transforming other aspects of their business.

"In the current climate, some will be focussing on issues such as where they will continue to be located, or assessing talent models, particularly during the two-year time frame in which the UK intends to depart from the European Union," Park said.

A third of businesses have suffered major disruption or complete failure due to the actions of outsourced providers, despite 80% of companies relying on them rather than implementing solutions in-house.

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