Xerox survey discovers that 94 percent of companies outsource some of their operations, compared with 2 percent in 1990
South Africa is now an outsourcing economy according to a Xerox survey. Ten years ago only two percent of South African companies outsourced some of their operations, today the figure is 94 percent and rising fast - 70 percent of companies have only started to outsource within the last four years. The survey finds clear reasons for this exceptional growth:
89 percent of companies report that outsourcing enables them to focus on their core business
84 percent say that outsourcing is an effective way to bring in new expertise
82 percent say that outsourcing aids future planning
75 percent report that outsourcing has delivered what was promised - or more
63 percent believe that outsourcing is an effective way of reducing direct employees
59 percent report that outsourcing reduces costs
"Outsourcing enables South African companies to acquire international standards and practices fast," says Pierre Nothard, general manager, Xerox South Africa.
The outsourcing trend is driven by the growing complexity of business in the technologically advanced international marketplace. Non-core management functions have become key contributors to business success where they are managed by experts rather than non-core employees.
Over 80 percent of South African companies now outsource at least three functions. A growing percentage - presently 13 percent - outsource seven functions or more. These companies operate almost as `virtual` businesses, concentrating on core operations and leaving other functions in the hands of outside specialists.
The survey questionnaire was distributed to 1500 companies in the manufacturing, finance, service, government and graphic arts sector. A statistically valid sample of 170 companies replied.
The survey shows that while it is common to outsource some functions, for example, 80 percent of companies outsource cleaning and security and 66 percent catering, only 31 percent of companies outsource information technology, 20 percent marketing and 14 percent distribution.
Only 20 percent of companies presently outsource document management. A third of these companies have networked computer systems - 27 percent within their office, 40 between national locations and 20 percent internationally - and two-thirds have their technology regularly updated as part of their contract.
Companies that outsource document management report an average cost saving of 16 percent, equivalent to a potential national saving of R10 billion a year.
Xerox South Africa is a pioneer and leader in document outsourcing. Its 37 contracts include Standard Bank, Rand Afrikaans University, Samcor, Coca Cola, Bayer, Western Deep Levels Mine, A C Nielsen and Butterworths. Xerox integrates its customers` existing document management employees into its own staff when it commences a contract. There have been no dip in staff numbers and no labour disputes.
"We offer excellent empowerment opportunities and career paths," says Pierre Nothard. "Document management works for everybody. The people that join us expand their work opportunities and our customers get the latest technology and a guaranteed level of performance."
Xerox Corporation is the global leader in document outsourcing with well over 50 percent - $3.4 billion in 1999 and rising - of the $6 billion annual market. Its revenues are growing by 30 percent a year, three times faster than the market as a whole.
Over 80 percent of the Fortune 500 companies outsource either part or all of their information function according to The Outsourcing Institute, based in the US. In total, companies and organisations around the world spend $400 billion a year outsourcing non-core functions as diverse as security, building, IT, maintenance, cleaning, document management, catering and even - in the case of Seattle`s city authority - a zoo and a number of aquarium shops.
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