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You are here: HomeArticle › Firms save more by cutting supplier costs than by laying off IT staff, says research

Firms save more by cutting supplier costs than by laying off IT staff, says research

From ComputerWeekly.com

"CIOs are reluctant to challenge IT service providers to cut costs because multi-sourced IT ecosystems are too delicate to tamper with and it is deemed easier to cut the cost of inhouse IT.

But, according to the research from IT sourcing consultancy Alsbridge, the savings made through reducing the costs associated with suppliers are higher than those made by cutting internal staff.

The study of 2,000 organisations worldwide found that spending on outsourced companies, as a proportion of revenue, is increasing at 6% a year, while internal labour costs are falling by 8% every year. It found that a 1% reduction in supplier and non-labour spend increased profit before tax by 4.1%, while a 1% reduction in internal labour costs only added 0.7%.

Homan Haghighi, director at Alsbridge, said many organisations are looking in the wrong place for cost reductions.”

Read more at ComputerWeekly.com


NCC Weekly News Update 17 November 2014

 

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