Growth in UK outsourcing industry nears 20%, cloud main driver

22 January 2018

Outsourcing across the EMEA region has seen a steady overall performance during the past year, according to new analysis. While technological trends have seen the business technique boosted, however, uncertainty regarding the geo-politics of Europe, as well as the UK’s recent Carillion collapse, could hinder further progress in 2018.

Global technology research and advisory firm Information Services Group (ISG) has released its latest EMEA Index figures, which have unveiled a startling up-spike in outsourcing revenues in the UK. The ISG’s Index has been tracking the health of the outsourcing industry for 15 years now, and the latest key findings from the leading technology research and consulting firm suggested that the practice of outsourcing in the UK is rapidly outstripping competitors across the EMEA area as a whole.

The Index measures commercial outsourcing contracts with an annual value of €4 million or more, and revealed that year-over-year the EMEA, new trends are reshaping the outsourcing industry. Total value growth was more or less flat compared to the prior year, as traditional sourcing, at €1.9 billion, fell 11%, while as-a-service sourcing, at a record €1.1 billion for the region, was up 27%.

Growth in UK outsourcing  nears 20% over 2017

Outsourcing demand was particularly boosted by the growing appetite of companies for cloud-based services. The need for such offerings in the EMEA shot up by 41% over the past year, as organisations sought to take advantage of newer technologies. The value of As-a-Service sourcing contracts now stands at €3.9 billion in the region, while the financial services sector continues to lead the way when it comes to cloud adoption. According to a recent study by PA Consulting, two-thirds of businesses that currently outsource IT solutions will continue to do so at the same rate or more, with 35% suggesting that they are planning to ramp up their outsourcing.

At the end of 2017, ISG’s UK Director Steven Hall also predicted that a surge in interest in robotics would see a further boom in technology-related outsourcing. Hall said, “The adoption of automation, machine learning, robotics process automation and cognitive technologies will continue to reshape enterprise strategy and workplaces, with an increasing number of tried-and-tested success stories finally persuading slow-adopters. Indeed, early-adopters are now looking to the next iteration of these technologies, so the race is on for service providers to deliver the goods.”

Regional variation

According to the analysis, the outsourcing market in EMEA is performing well, with contract values increasing by 3% in 2017. The extent to which this increase occurred varied across borders, with results varying dramatically. While the volume of outsourcing contracts remained steady in the Nordics, for example, an absence of large deals in the region saw a drop in Annual Contract Value (ACV) of 18%. Similarly, with fewer large deal awards, ACV in the DACH region of Germany, Austria and Switzerland fell 16% in 2017. The 165 contracts signed were also down compared with the previous year, by 13%. The continuing uncertainty following the elections in Germany is suspected to have pulled the market down in the second half of 2017. Meanwhile, Southern Europe’s ACV plummeted more than 70% to its lowest level in five years.

In contrast, France saw annual ACV growth boosted by 8%. This could have been larger, but for a dip toward the end of the final quarter of the year, which ultimately caused French outsourcing contracts to decrease numerically – albeit very slightly – to 62. On top of this, despite continuing uncertainty of its own thanks to the protracted Brexit saga, the UK saw sourcing activity and ACV grow in 2017. This follows the broader trend of organisations entering into higher numbers of smaller-value contracts, as they look to take a more agile approach to sourcing. The 206 contracts and €3.2 billion in ACV were both up 18% year on year, albeit on a soft compare with 2016, the UK’s weakest year in a decade, but this may well be a sign that business sentiment has adapted to the long-term conditions created by Britain’s exit from the EU.

Quote - Steven Hall

Summarising ISG’s latest findings, Steven Hall commented, “European businesses are seeing the potential of new technologies to help them on their digital transformation journeys, while reducing costs and improving agility. Macroeconomic uncertainty across Europe makes the business of predictions tricky. Nonetheless, the trend towards as-a-service is one we can expect to see accelerating over the next 12 months, with consistent growth of 20% or higher for the as-a-service market.”

While the 2017 figures might point toward another good year for outsourcers in the UK, the practice has come under increasing scrutiny at the turn of the year – particularly in relation to public sector contracts. Since the announcement of Carillion’s collapse, the Government has faced calls for a public inquiry into the conduct of officials – having handed over £1 billion in contracts to the outsourcer, whose troubles were reportedly well known to the Cabinet. One example cited by critics is that just weeks after issuing a profit warning in September, Carillion was awarded a £62 million rail contract, as the Government sought to push ahead with its upgrading of the often maligned rail network. The company issued a total of three profit warnings over 2017.

Since the downfall of Carillion, a number of other providers have also come under increasing scrutiny. Interserve, a FTSE 250 firm – which has a £1 billion a year turnover and 80,000 staff worldwide (25,000) of those in the UK, has issued several profit warnings in recent times, while fellow public sector outsourcer Capita has seen share prices plummet despite winning a government contract, worth £31 million, to administer Royal Mail’s pension fund.


First Consulting helps BDO to build new RPA capability with UiPath

22 March 2019

Global accounting and consulting firm BDO is working on its own digital transformation, as it looks to pioneer the use of Robotic Process Automation in its work. Business consultancy First Consulting is helping BDO with designing the RPA journey and building its internal RPA capability.

Robotic Process Automation describes a process that utilises software programmed to autonomously carry out basic tasks across applications, reducing the burden of repetitive, simple tasks on employees.  Able to be developed and deployed in a matter of weeks, RPA is highly cost-effective and can typically demonstrate returns on investment within a few months. It has been known to dramatically improve the speed and accuracy of processing, resulting in a quicker and higher quality of service to customers.

Last year, BDO explored the value of Robotic Process Automation, concluding the technology has the capacity to bolster the firm’s service offerings as well as internal operations. On the back of this analysis, the professional services firm incorporated RPA into its ICT strategy for the coming years. This has already seen the first robot delivered at BDO, which has since been taken into use by the business.

First Consulting helps BDO to build new RPA capability with UiPath

First Consulting is advising BDO on all aspects of deploying and scaling up the technology across the organisation – from capability building, governance structure and processes to architecture and IT infrastructure. The joint team of BDO and First Consulting have, meanwhile, also taken the first steps to set up an internal RPA capability.

BDO faces a key year for its operations, particularly in the UK where it has recently become the fifth largest provider of audit and advisory services in the country. As the firm looks to further grow its junior auditing market lead over the Big Four, the effective deployment of innovations such as RPA could prove key in the coming period.

With RPA on board, BDO’s ICT department aims at increasing the satisfaction of employees by removing a range of often boring (repetitive, administrative) tasks. By automating such tasks, productivity can also be increased at the professional services firm, as its staff will be freed up to spend more time performing value-adding activities. On top of this, RPA can execute tasks and processes with a lower margin of error compared to humans, enhancing BDO’s internal operations.

Working with RPA vendor UiPath, during the project at BDO, First Consulting has sought to apply its best practice RPA growth model methodology. The approach differentiates between three different growth phases, starting with RPA, structuring RPA, and scaling RPA.

Project results are delivered through an agile approach. According to the engagement partners, the following results were achieved in a period of six weeks:

  • Developed a first robot process that directly creates value for the business and contributes to the 360 degree customer view by migrating information from two systems to another system;
  • Advice and implementation plan on the technical design in relation to RPA, ICT guidelines, a security questionnaire and a basic infrastructure;
  • A roadmap for setting up an internal RPA capability, including the following components: processes & governance, change management and capability building & training;
  • Plan for setting up benefits tracking / monitoring as well as reusability of robot process components.

So far, First Consulting and BDO have enjoyed a pleasant and productive cooperation, achieving “tangible results” along the way. According to First Consulting’s team engaged by the project, the close match between the firms’ norms and values proved a key success factor. In the coming period, First Consulting and BDO are investigating opportunities to develop a digital capability in other areas of BDO’s business.

Roel van Overdam, Head of RPA at First Consulting, said of the collaboration, “Our pragmatic, no-nonsense approach has clearly paid off.”

Related: First Consulting: Is RPA implementation going in the right direction?