Demand for outsourcing to grow in the Netherlands

27 May 2015 4 min. read

IT outsourcing in the Netherlands is expected to grow over the coming years, with 49% of top IT spending organisations looking to outsource more in 2015 against only 6% of companies that expect a decrease. Key drivers are focussing more on core business, cutting costs and improving service quality, reveals a new study from Quint and Whitelane Research.

Every year Quint and Whitelane Research explore the state of the outsourcing market in a number of European countries, including the Netherlands, Italy and Spain. The 2015-edition, titled ‘IT Outsourcing Study Netherlands’, is based on more than 200 participants from the top IT spending organisations in the Netherlands, and spans across all industries. Together the respondents are responsible for a total annual contract value of more than €4 billion.

Planned outsourcing
The study finds that this year half of Dutch IT departments will seek to ‘outsource more’. The results also show that the group for which there is no change stays relatively stable, at 36% in 2015 compared to 35% in 2014. There is also a marked decrease in uncertainty about organisations’ position with respect to outsourcing, dropping 5%, with a sentiment to not outsource decreasing 2%.

plans for outsourcing over next year

Alex van den Bergh, Global Sourcing Advisory Lead at Quint, remarks: “There is a persistent rumour that outsourcing is on its way out. This has been shown to be incorrect: while some ‘insourcing’ is taking place, the majority of organisations are indicating that they will outsource more. In fact the speed of growth is accelerating: 43% last year, 49% this year.”

Driving outsourcing
Asked for what the main drivers of outsourcing are, 60% of the respondents say that this year the biggest concern is ‘focus on core businesses’, followed closely by ‘cost saving’ and ‘improvement of service quality’. Last year cost savings was the primary reason to go for outsourcing, and this year’s results reveal that cost management remains key but strategic reasons such as focus and quality have become just as important. “It is a sign the Dutch IT outsourcing market is maturing”, says Van den Bergh. “Most organisations recognise that a large part of their IT is simply not core business and can be outsourced at higher quality. Cost is important but not the only driver anymore."

reasons to outsource more

Key trends
The researchers also looked at key trends in the outsourcing landscape. One trend is that nearshore and offshore continue to grow in all but one IT category, with large gains seen in the ‘application development / maintenance / testing’ segment (33% expect an increase in near and offshore) and the ‘end-users services’ segment (21% expect an increase), while the ‘network & telecommunications’ sector remains relatively flat with 7% indicating they will do more compared to 7% who will do less.

key trends in nearshoring and offshoring

Van den Bergh reflects on the reason for increased reliance on outsourcing: “I only have one explanation: it is clearly becoming increasingly difficult to conduct internally managed IT processes cost effectively. In addition, there are whole new problem areas organisations need to deal with, think of the cloud, BYOD and Internet of Things. For these issues, organisations are seeking access to knowledge that is scarce. Furthermore, outsourcing provides companies flexibility in their IT operations, and the opportunity to quickly and temporarily scale up or down or work at lower cost.”

XaaS uptake
A further trend in the Netherlands highlighted by the report is the increasing use of XaaS, which has grown to 95% of organisation compared to 84% in 2014. Particularly SaaS now being used by 89% of organisations compared to 74% in 2014. While IaaS jumps 15% in a year to 54% and PaaS is up 13% to 41% of those surveyed.

XaaS grows to 95 percent of organisation

Appetite from Dutch organisations for public cloud based services is on the rise as well. 47% of respondents use public cloud solutions, with a further 13% looking into joining such a service. 34% are however, currently not interested in such services, while 6% do not know. The satisfaction levels for organisations using cloud based services is very high however, with 70% satisfied and 4% very satisfied. Only 5% were unsatisfied in some way, with merely 2% very unsatisfied. The remainder is somewhat satisfied with the service provided.

public cloud use and satisfaction levels

“The satisfaction regarding public cloud vendors is high. Organisations seem to accept that they need to adapt to the systems of the suppliers instead of the other way around,” says Van den Bergh.