Across the board, satisfaction with IT outsourcing companies is high in the Netherlands; however, the differences between the various parties are increasing, according to new research. TCS, Cegeka and Centric are, in the eyes of decision makers involved in the sourcing of ITO contracts, the best-performing service providers.
Every year, research company Whitelane Research and outsourcing consultant Quint Wellington Redwood (Quint) join forces to research the major trends in the Dutch IT outsourcing market. For the 2016 edition of the study, the authors surveyed more than 200 Netherlands-based organisations representing more than 550 major IT outsourcing contracts – according to Whitelane and Quint, the survey covers at least 90% of the Dutch market for sourcing contracts with a value of €1 million or greater.
The data shows that focus on core function is increasingly becoming the foremost driver for outsourcing of IT tasks. Concentration on core areas has, for three years now, topped the list of major outsourcing drivers, ahead of the number 2 factor, cost, with the gap continuing to widen year on year. The development is, according to Quint partner Alex van den Bergh, no surprise: “managing everything in-house simply requires too much attention, and tends to become costly. How do you guarantee the continuity of a generic IT process if you’re only able to supply the minimum amount of people to make it work?”
The speed with which focus on core functions has outpaced cost cutting in the Netherlands is remarkable, says van den Bergh. The sourcing expert says that on the matter the country is a frontrunner relative to the rest of Europe, where cost cutting still serves as the main motivation for passing on IT processes to third parties. The number three spot this year goes to improving the quality of IT services. Access to expertise, increased financial transparency and increasing flexibility are other frequently cited motivations for outsourcing (parts of) the IT process.
Top IT-outsourcing companies
The researchers also asked the respondents – managers and IT experts from different sectors – to review the performance of their IT outsourcing partners. All in all, the overall satisfaction with the services provided stood at 71%, the same level as the year previous. TCS leads the rankings with a high score of 88% – for comparison, the winner of 2015, Cegeka, at the time scored a satisfaction rating of 84%. Cegeka managed to increase satisfaction levels by 2% to 86%, while Centric (82%) added 6% to the firm’s score this year, making them third in the 2016 list. The top five is completed by Cognizant and Wipro.
The top 10 further consists of two managed services divisions of telecom players (Vodafone and Tele2), two Indian players (Infosys and HCL) and CGI, formerly Logica, which managed to increase its satisfaction score from 67% last year to 73% this year.
Remarkably, according to van den Bergh, despite the high overall satisfaction, the spread between players is increasing. The gap between the most respected party (TCS) and the least appreciated service provider of those mentioned in the survey (Ordina) is greater than ever before. The research also found that this year nine parties scored above average (71%), compared to eleven last year.
The success of an IT sourcing relationship is not only dependent on the third party, at least equally important is the maturity of the client organisation. The data show that the professionals surveyed by Whitelane and Quint predominantly assess their own organisation’s role in the relationship as satisfactory. Especially the initial phases of sourcing engagements (strategy and vendor selection and -contracting) are perceived to be being well performed. The scores fall slightly for the execution phases (transition management and execution), yet three quarters of the respondents rate their own skills as at least competent. The assessment, however, is likely to contain significant bias, says Van den Bergh – a large number of the respondents are unlikely to admit they are not good at something, or simply may even not be able to recognise their own lack of requisite qualities.
Against this background, the researchers also asked suppliers to assess the skills of their clients. This shows, as expected, that scores come in consistently lower. “Regarding sourcing strategy and vendor selection, the differences are pretty small (a few percent). Understandable, because it relates to an engagement in which parties have come to an agreement. Once a working relationship takes form, then the perceptions about how well the client operates within the outsourcing contract strikingly diverges,” find the researchers.