Outsourcing Trends in Pharma Companies

Best Practices LLC, which researches organizational operations to understand best practices, has set its sights on outsourcing in pharmaceutical companies. Outsourcing Trends for I.T. Services Supporting Pharma Sales & Marketing, which is being sold for $1,495, examines practices at the biggies: Aventis, Bayer Healthcare, Abbott Laboratories, Bristol-Myers Squibb, GlaxoSmithKline , Eli Lilly, Sankyo, Roche, Novartis and Johnson & Johnson.

Here are a few of the results the company is sharing publicly:

Most companies outsourced their help desks and hardware support while the majority insourced their datacenters.

When outsourcing, most companies relied on Service Level Agreements (SLA) to maintain quality standards. Expectations of service levels include these:

• Response time in less than 20 seconds
• Call abandonment rates of less than 3%
• First call resolution for over 90% of calls
• 24 hours a day, 7 days a week help desk coverage
• Hardware repair in 12-24 hours

Outsourcing may not be the best option. Some companies reported that outsourcing did not save them money and that they lacked the qualified personnel internally to manage the outsourcing venture effectively. These companies expect long term trends of less outsourcing.

Closely tie rewards and penalties to quality performance measures. Most companies found giving IT outsourcing vendors incentives to perform best on those measures most important to the company, helped the company enjoy lower costs.

The current sourcing model for the help desk is as follows:

• 50% of pharma companies outsource 100% of those operations.
• 12% keep it 100% in-house.
• 40% follow a hybrid model (both outsourced and insourced). In those operations, 70% of help desk tends to be outsourced and 30% insourced.

Here are some interesting stats about costs in the IT support areas:

The two biggest outsourcers among the responding companies pay $9,600 and $13,750, respectively, for annual full-time employee staffing costs. (The latter amount was cited by the company that had the highest number of FTEs as well.)

The “weighted benchmark average” for a FTE among all respondents was $31,064. (The highest cost cited was $45,486 -- presumably from a company that doesn’t outsource at all.) This is much lower than is typically cited in studies that examine the costs of IT. Obviously, most of the respondents are doing outsourcing, and most of them may use help from offshore service providers. But it points out that you don’t have to source out your entire IT support operations to gain value. The smart and judicious use of outsourcing in a function can reduce expenses dramatically.

If you’d like to read a five-page excerpt from the report, go here.