UK IT Outsourcing Market Reaches the Biggest Tipping Point Since its Inception

The 5th annual UK IT Outsourcing Study, conducted by Whitelane Research in cooperation with PA Consulting Group, investigates more than 800 unique IT outsourcing contracts held by over 250 of the top IT spending organisations in the United Kingdom. All industry sectors are represented.
Key findings from the UK study include:

  • There is increasing appetite for UK companies to rebalance their outsourced and internally-provided services. 35% of all respondents in the study state that they are planning to outsource more, however 22% cite that they are planning to outsource less. We anticipate that increasing adoption of agile delivery methods is driving mature customers to bring development and business teams closer together, whilst less mature customers have yet to reach this inflection point. Overall, the sourcing market is set to continue to grow – as 65% of all respondents in the study confirm that they will continue to outsource at the same rate or more.
  • Reducing costs is the highest priority for organisations (69%), an increase of 9% since last year. Business transformation is the 2nd most important driver, increasing by 16% in the last year.
  • Overall, respondents are satisfied with their IT service provider(s), with 86% of the 802 IT outsourcing contracts being evaluated as satisfactory. This figure has remained constant over the past 5 years.
  • Getronics and Hexaware are the highest ranked providers with a general satisfaction score of 84%, followed by Amazon (79%), Cognizant (78%) and Computacenter and TCS (both at 77%).
  • General satisfaction tends to show that top performers are in one of three broad categories:
  1. Focused in application development and maintenance activities
  2. Specialist providers focusing on doing a smaller breadth of services well
  3. Cloud providers delivering a well understood, standard offering to their customers with minimal commitment

“The market for outsourcing is at the biggest tipping point since the term was coined. There are lots of “predictions” and “forecasts” suggesting that the end for service providers, is nigh. The reality is much more complex than that. The journey to leveraging new technologies such as Automation, Robotics, AI is only just starting and its impact on the outsourcing market is yet to be accurately predicted. What we can say is that there are huge potential opportunities from these new technologies but, like most change projects, this will be a complex journey.” Martin Molloy, Sourcing Expert, PA Consulting Group.

  • Clients and Service providers have vastly differing view of client capability in managing service integration. While 77% of clients are somewhat satisfied with their own service integration capability, 8% of service providers rated client capability in service integration as mature. A fundamental gap in perception of capability.
  • Compared to other countries, the UK is generally considered to be the most mature outsourcing market in Europe and as such, is an indicator for new and future trends for other European countries. A couple of notable differences are: the percentage of organisations that are insourcing is by far the largest in the UK when compared to other European countries (22% compared to an average of 11%). This is partly caused by the fact that in most other European countries not as much has been outsourced as in the UK. It is also noteworthy that besides cost reduction, business transformation is a far more important driver in the UK than in any of the other European countries (64% compared to an average of 39%), while focus on core business and access to resources are less relevant for UK organisations when compared to organisations on the continent.

Results Presentation

Above: Jef Loos of Whitelane at the results presentation of the 2017 UK IT Outsourcing Study in London.

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Management summary

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