40% of UK organisations plan to outsource more in the next few years, research by PA Consulting and Whitelane Research shows, highlighting the significant growth potential of the UK outsourcing market. The main reasons for organisations to outsource more is to focus on core business and to transform their business. The survey also shows that the majority of UK organisations is satisfied with their outsourcing partner.
PA Consulting Group and Whitelane Research recently released the results of their ‘2015 United Kingdom IT Outsourcing Study’, for which they investigated more than 800 unique IT outsourcing contracts held by more than 260 of the top IT spending organisations in the UK region. The total annual value of these contracts is more than £15 billion, almost three quarters of the UK market by value.
When asked for their future outsourcing plans, more than two-thirds (69%) of UK organisations indicate to outsource the same or more in the coming years. While 29% does not plan to change the amount they outsource, 40% will increase their outsourcing, highlighting, according to the researchers, the growth potential of the UK outsourcing market.
The number one reason to outsource more, as listed by the respondents, is to focus on core business, as cited by 68%. Business transformation is the second most important reason (61%, up from 52% in 2014), followed by cost reduction (59%) and access to resources (55%, up from 47%).
“It is interesting to see that there is a return to investing to support the business after years of cost cutting and sweating existing assets during the economic downturn. […] The emphasis on business transformation suggests a strengthening of demand from businesses to deliver upgrade projects that have been held back whilst the investment taps have been turned off, in particular to deliver seamless service across different channels including mobile,” explains Vassilis Serafeimidis, Head of IT Sourcing at PA Consulting Group.
“Given the change in focus towards business transformation and focusing on core business, this suggests a need for greater care in supplier selection and contracting rather than relying on ‘more of the same’ from the ‘cost down’ approach that has dominated in recent years.”
The overall majority (86%) of organisations is satisfied with their outsourcing contracts, with almost half (44%) stating to be satisfied, and another 12% very satisfied. Just over 10% of organisations say they are unsatisfied, of whom 1% is very unsatisfied. Although the average satisfaction is high, with an average satisfaction level of 69%, there are significant differences between the performances of the nearly 30 IT service providers researched.