IT Outsourcing Global Survey

According to Deloitte’s Global Outsourcing survey 2018, there were three major trends that increase outsourcing globally. The findings of 2018 survey show a significant shift from Deloitte’s findings of 2016. Here they are:

1. Outsourcing is enabling competitive advantage.

While cost optimization is critically important for outsourcing, it is no longer even in the top five key trends in outsourcing. Instead, disruptive outsourcing, when executed well, can deliver a competitive advantage by transforming the way organisations operate, making them more agile, efficient, and effective. The advantages are obvious to respondents: approximately 84 percent of them have initiated discussions, conducted pilots, or implemented some disruptive solutions.

2. Organisations are embracing disruptive outsourcing technologies such as cloud and robotic process automation (RPA).

93% of organisations are considering or adopting cloud solutions, and 72 percent are considering the advantages of adopting RPA solutions. In addition, 70% of respondents believe their service providers have opportunities and abilities to implement disruptive solutions.

3. Disruptive solutions can lead to real challenges.

Data migration, security requirements, and application optimization/change are a few examples of challenges related to cloud adoption. Organizational resistance, highly fragmented processes, and regulatory restraints remain as common challenges having to do with RPA adoption. Disruptive outsourcing solutions are challenging more traditional methods and driving a competitive advantage to those that adopt it.

Disruptive outsourcing is enabling organisations to reimagine and transform their business. It is challenging traditional outsourcing and driving competitive advantage. More than half of the organisations surveyed are adopting, or considering adopting, disruptive solutions to drive performance, improve speed to market, and increase innovation. The focus has shifted: yesterday, outsourcing was about cutting costs and improving service delivery. Today, disruptive outsourcing is about collaborating with partners in the marketplace to integrate services that organisations can’t build on their own to innovate, transform, grow, and shake up their competitors. Outsourcing-led transformations can address both business and IT challenges. They have the potential to bring about dramatic change to the outsourcing industry like never before. This will result in cost reductions, though many organisations expect to invest some of those savings into business investments, particularly when doing so can eradicate costs elsewhere. With disruptive outsourcing, the only limit is imagination.

To move forward effectively, organisations must be thoughtful and proactive in every step of their outsourcing evolution, whether choosing service providers, negotiating flexible contracts, implementing a strong governance program, managing cybersecurity, addressing regulatory issues, or implementing robust service integration. Most organisations understand that now is the time to capitalize and get ahead of the competition, and disruptive outsourcing is the approach to take.

Most survey respondents realize they should change their outsourcing strategy. Their next steps are determining how they can change solutions, which partners will generate increased revenue, how they can construct an incentives structure that motivates them to continually innovate, and how to implement and manage new outsourcing paradigms. History has shown that it is difficult to catch up if you ignore or delay acting on outsourcing disruptions. Those who seize this opportunity can execute real change. Chances are it will cost more in the short term, but they will be far better positioned to gain a competitive advantage in the long term. For those who don’t, they risk getting left behind by more acute competitors.

Lessons Learned: What organizations are planning for the future

The following results document what respondents said they would do differently when launching their next outsourcing initiative based on past experiences:

Service Provider Selection

The top responses had to do with the service provider selection process– spend more time in RFP or service provider selection (42 percent), and use a competitive bidding process (39 percent). This may be due to the increased maturity of the procurement and vendor management functions within organisations. Many clients use a single source approach for selecting a service provider, with an expectation that the process will be faster to execute. However, they will likely pay higher fees, lower service levels, and less favourable terms. And it usually takes longer, since a competitive process creates a greater sense of urgency than a sole source approach.

Strategic Planning Approach

Other popular survey results involved taking a more strategic approach to planning a new outsourcing initiative: increasing the scope of service (34 percent); transforming the process rather than lifting and shifting (30 percent); investing in more service integration and transition (28 percent); and using a third-party advisor (27 percent).

This suggests that organisations recognize that the value of transformation, improved processes, experienced counsel, and transition play on the success of their outsourcing programs, though often too late. Today’s disruptive outsourcing environment is filled with opportunities to enhance innovation and market competitiveness for forward-thinking organisations.