More than 70% of companies plan on increasing their outsourcing, and six out of 10 their reliance on global shared services. On average, they will boost their offshoring activities with 20 to 30%, a record-high states consulting firm KPMG in a newly released report co-authored with HfS Research.
Professional services firm KPMG recently released its report ‘The State of Services & Outsourcing in 2014: Things Will Never be the Same’ in cooperation with HfS Research, a knowledge community for the global services industry. For the research, 1,079 people were surveyed between May and June 2014. Of the respondents, 39% was a provider of outsourcing services, 20% a buyer of outsourcing services/evaluating outsourcing, and 32% an advisor/consultant of outsourcing or shared services. The interviewees come from all over the world, even though the majority comes from the US, and the companies surveyed range from no-profit annual revenues to more than $ 10 billion.
The main conclusion of the survey is that more than 7 out of 10 global businesses, 72%, will increase their outsourcing services investments, and 61% plans on increasing their reliance on global shared services over the next two years. The report shows that there is an increase in the use of offshore services – both with outsourcing service providers and internal shared service centres. On average, companies plan on increasing their offshoring activities with 20% to 30% in the coming year, a record high according to the consulting firm, a development that is mainly driven by technology progress and the globalisation of company supply chains.
The research indicates that the activities offshored, are entailing more and more high-value work. Around 30% of the companies are increasing the offshore component of their finance and accounting in the next year, the same is expected for IT, procurement, HR, industry-specific, and customer service functions. “Providers need to prove they can do more than basic operations, otherwise outsourcing runs the risk of becoming a staff augmentation model for flexing operations as opposed to a strategic partnership between provider and buyer that can add more skill, technology, and analytical capability for clients,” says Dave Brown, KPMG’s Global Lead, Shared Services and Outsourcing Advisory.
Top 20 offshoring locations
With outsourcing investments increasing and more high-value work being outsourced, companies need to consider where they want to offshore their services. Just recently, consulting firm A.T. Kearney investigated the offshoring landscape around the globe and released its ‘Global Services Location Index’ in which it presents an overview of the top 20 offshoring locations.