Companies That Make the Decision to Outsource on Cost Alone Fail to Achieve Its True Advantage...

Business Editors

NEW YORK--(BUSINESS WIRE)--Oct. 8, 2003

Cap Gemini Ernst & Young Outlines Key Decision

Criteria For Businesses

As the rush to outsource offshore continues to gain momentum among North American businesses, those companies who do not fully

consider key factors other than cost, will fail to realize the full benefits of offshore, according to Cap Gemini Ernst & Young (CGE&Y), one of the world's largest providers of consulting, technology and outsourcing services. In its latest ExecutiveEdge management brief (available at http://www.us.cgey.com/outsourcing), CGE&Y outlines the key criteria companies must consider when developing an outsourcing strategy.

"Cap Gemini Ernst & Young has developed a different approach to leveraging the benefits of offshore," noted Bob Pryor, Leader of Outsourcing Services for CGE&Y, North America. "The idea of a single offshore approach has received a great deal of attention, however, we believe that the concept of Rightshore(TM), which blends onshore, near-shore and far-shore delivery, at a committed price and service level, will produce maximum benefits for our clients."

Gartner estimates that by 2004 more than 80 percent of U.S. executive boards will have discussed offshore sourcing and more than 40 percent of U.S. enterprises will have completed some type of pilot or will be sourcing IT services through a global delivery model. These statistics underscore the importance of maximizing the outsourcing investment through a well-defined distribution strategy.

"Comparing rate cards and buying on a 'price per head' basis may be a popular approach, but it is not the right solution. To drive sustained value, companies must look beyond cost to the productivity of individuals and the organization," continued Bob Pryor.

Why Companies Must Consider the Rightshore(TM) Blend

According to CGE&Y, companies must consider a Rightshore(TM) approach, not simply the decision to outsource offshore. CGE&Y's Rightshore(TM) outsourcing services model is a blend of onshore, onsite, nearshore and/or offshore capabilities.

-- Onshore: Moving services provision within the same country but

to a cheaper location. For example, moving a service provision

from London to Scotland.

-- Onsite: Service managed from the client site. For example,

business critical production line support.

-- Nearshore: Moving services provision to a nearby region of the

world. For example, from France to Spain.

-- Offshore: Moving services provision to another region of the

world. For example, from the US to India or China.

"Rightshore(TM) was designed to provide the best solution to the client, leveraging labor arbitrage to its best advantage while ensuring the right skills and access are provided from the best location," said Pryor.

According to CGE&Y, when companies develop a distribution strategy, they should consider criteria such as client dependency, cultural issues, time and cost constraints and recommendations for the distribution of technical activities. Pryor points to the example of a routine standard process, for which companies can take advantage of reduced labor costs offshore, versus a specialized task that requires unique skills and high customer touch, which may be better executed onshore or nearshore.

Rightshore(TM) Enabled by Global Distributed Delivery

CGE&Y has built a global distributed delivery network that leverages existing investments, methodologies, processes and resources to support multiple clients from multiple locations. The network of centers allows CGE&Y to maximize the culture and climate of regional and local talent pools as well as navigate regulatory and political environments, and security considerations.

About Cap Gemini Ernst & Young Group

The Cap Gemini Ernst & Young Group is one of the world's largest providers of Consulting, Technology and Outsourcing services. The company helps businesses implement growth strategies and leverage technology. The organization employs approximately 50,000 people worldwide and reported 2002 global revenues of 7,047 billion euros. More information about individual service lines, offices and research is available at www.cgey.com.

About ExecutiveEdge:

Cap Gemini Ernst & Young's ExecutiveEdge series advises corporate leaders on securing a competitive advantage in their markets through leverage of outsourcing as a requisite component for their overall business strategy.