Outsourcing and offshoring in Germany – the current situation

Filed by team twago on March 25, 2010

On the twago platform, customers can outsource their projects to external service providers. This has many advantages, but it also requires planning. But what is the current situation of outsourcing or offshoring in Germany and the world? What is the structure of outsourcing demands?

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Structure of the demand for outsourcing and offshoring in Germany

Compared to the USA and Great Britain, the German speaking areas showed considerable reservation regarding the demand for outsourcing and offshoring. In recent years, however, this has changed. More and More German enterprises come to the conclusion that the key to preserving the ability to compete is the concentration on the core business. The preservation of the German location plays an important role in this. Furthermore, outsourcing and offshoring present the potential to reduce costs.  There are several nationally and internationally successful German companies, who work with external partners.

Outsourcing and Offshoring for Small and Medium sized Business

Almost every enterprise makes use of the possibility of outsourcing to work with external service providers. Offshoring, however, is mostly used by companies, which exceed a certain size and complexity. A survey shows that it is predominantly big companies, which use outsourcing and offshoring. Small and medium sized businesses (SMBs) appear to be more reserved than big companies when it comes to outsourcing. This gap can be closed thanks to twago. The platform addresses founders and SMBs in particular, however, the advertisement of more complex and comprehensive projects and jobs is also possible.

Outsourcing and Offshoring Case Studies

In Germany, it is generally big companies with a number of employers higher than 250, which use outsourcing and offshoring. They usually have production sites in different countries and work with external service providers from all around the globe. The 30 DAX companies are amongst them. The following case studies illustrate the behavior of big enterprises regarding outsourcing activities.

Outsourcing Case Study Henkel

Henkel employs 55,000 people in 125 countries. Currently, the company makes use of the possibility of outsourcing and offshoring. In August 2009, Henkel outsourced their desktop support to the Indian company Unisys. Apart from PCs and Notebooks, Unisys also supports Henkel’s global user service as well as its on-site support. The Henkel-Unisys partnership is a 5-year contract.

Henkel has planned another outsourcing project for September 2010. The plan is to subcontract the development and maintenance of their own Application Services (SAP Applications, Business Intelligence Solutions, CRM and Web Applications) to Accenture. This plan has been developed since the spring of 2008. Through outsourcing, Henkel wants to concentrate on its customers more effectively. Furthermore, the company hopes to strengthen its global team as well as gain higher efficiency due to increased concentration on the core business. Further goals of the outsourcing to Accenture are the reduction of costs, the increase of flexibility and the continuation of service provider consolidation. Generally, these advantages can be enjoyed by all enterprises that outsource projects. SMBs or founders can pursue new possibilities due to outsourcing.

Outsourcing Case Study DB Systel

DB Systel is to 100% a subsidiary company of German Deutsche Bahn AG. This system partner of DB AG was founded in January 2007 and has 5,000 employees. In the case of DB Systel the outsourcing is internal from DB AG to DB Systel.

Furthermore, DB Systel has several different offshore-outsourcing partners. Amongst them is Accenture on the Philippines with currently 13 projects, NIT technologies in India with 15 projects, as well as Hexaware technologies with 6 projects. The goal of these offshore-outsourcing projects is scalability, economic efficiency, learning and internationalization.

Outsourcing Case Study Kassenaerztliche Vereinigung Bayerns (KVB)

German KVB (Association of SHI Physicians of Bavaria) has 1,700 employees in 7 locations. First and foremost, KVB’s goal is to focus on core competencies as well as to optimize the costs and the chain of economic value added. These are also the reasons for the coming SAP outsourcing to an external service provider. The planning and implementation was scheduled for the end of 2009.

Besides these case studies there is a multitude of other examples for big companies in Germany, which have turned over assignments and processes to external outsourcing partners. Companies like Deutsche Telekom, Sueddeutsche Zeitung, Lufthansa, Frankfurter Allgemeine Zeitung, BMW and E-Plus Mobilfunk are outsourcing assignments and processes to the American IT company Unisys. Ford and Opel signed contracts with the Indian outsourcing enterprise TATA Group. The two DAX companies Siemens and SAP subcontract assignments and processes to India based Infosys.

All these case studies show the outsourcing activities of big companies. For SMBs and business founders it has been difficult to find partners and to effectively outsource assignments and processes. With the help of intermediation platforms like twago, this has become easier for enterprises of all sizes.

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About the Author ()

team twago brings you the best news about working online as a freelancer and finding the right freelancer for your projects. You can find tips, tricks and guidelines for using the twago freelance platform, plus much more. Team twago is made up of native speakers from several countries.

Comments (3)

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  1. Gregory says:

    What are the obligations of German companies to former employees an their communities when they move production to other countries?

    • Shaun says:

      Former, or current employees?

      My experience when working for companies that have relocated their business abroad, I was always offered a relocation package.

      I would presume this would be standard for certain positions, probably not all.

  2. Maulik says:

    Nice Blog! Many peoples didn’t know about it but this post make easier for them. And also helpful for me.

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