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Wednesday, 22 August 2012 01:14

The Sourcing Value Indicator

The primary impetus for outsourcing has historically been the promise of cost savings, fueled by salary arbitrage. Based on this premise, Buyers have traditionally focused their energies on driving down the price of services to their lowest possible rates, while increasing their purchasing volumes as the principal lever for enhancing their savings. As the market continues to grow and mature, so does the expectations of the Buyers, who are becoming increasingly more interested in obtaining measurable business value, of which “Cost Savings” is only one component. Progressive Buyers are making great strides in quantifying the true business value of outsourcing, as a function of Productivity, Quality, Flexibility, and ultimately Cost.

Based on our analysis of a number of outsourced projects, Sylvan Advisory has developed an approach to normalizing the relevant attributes associated with a Baseline environment, as compared to an Outsourced environment. In doing so, Sylvan has established a proven process for assessing the true business value associated with any type of service-based outsourcing initiative, and representing it in the form of a single number (Sourcing Value Indicator). If you are interested in understanding more about the “Sourcing Value Indicator”, a descriptive whitepaper can be found attached to this article, below. 

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