Ceitech is one of the biggest IT outsourcing companies in Buenos Aires, Argentina. The company, which has been in business 30 years, has just decided to use outsourcing itself.
The company executives analyzed the internal audit function and decided it was “inefficient,” according to Marcelo Traversaro, Ceitech controller. The firm wanted to replace its internal auditor with an outsourcing vendor who could “let us be sure about the quality of our services.”
It didn’t take a leap of faith for the outsourcing provider to decide to outsource its internal audit function. “We are very sure about outsourcing as a solution. We believe in the efficiency of the method,” he says.
Cost was a major motivator. Traversaro says outsourcing the internal audit function has lowered his cost by 10 to 15 percent.
In addition, “we wanted a specialist in this issue,” he reports. Ceitech’s provider, Grant Thornton, has a team of specialists who have invested their time and energy in the internal audit function.
The company looked at three firms before it selected Grant Thornton. Ceitech selected the firm because of its reputation in the Argentine market. Traversaro says he also received good references about the team of experts based in the Buenos Aires office.
Traversaro says “we took our time” researching an outsourcing provider. But the company made a quick decision because the executives were eager “to solve our problem.”
The Contract Hinges on Customer Satisfaction
There are no service level agreements. Instead, the outsourcing agreement is based on customer satisfaction. Ceitech can flick its heels and easily end the relationship if the quality of the internal audit does not meet its standards. There are no penalties for non-performance. Penalties are not a standard business practice in Argentina, Traversaro points out.
So far Traversaro says the eight month old relationship is working well; the two partners work together like a well choreographed tango.
More and more Argentine companies are searching for outsourcing partners, according to the controller. In the last five years outsourcing has become an important business strategy in Argentina. “Business has been very good here,” says Traversaro. And he predicts the next couple years will be even better.
Lessons from the Outsourcing Provider:
- Even outsourcing providers need to outsource non-core functions.
- Outsourcing gives buyers access to a team of experts that they could never afford to keep on staff.
- Outsourcing the internal audit function can save 10 to 15 percent.
- Service level agreements and penalties are not standard practices in Argentina.