whitelaneresearch

• Over the next two years more outsourcing is predicted for the BeLux, with 78% of respondents planning to outsource at the same rate or more. In comparison with last year however, insourcing has increased by 7% while plans to outsource more have dropped by 8%. The BeLux region has historically experienced one of the highest percentages of plans to outsource in Europe however, for the first time since 2016, plans to outsource more have fallen below 50%.
• We have asked the 14% of organisations that plan to outsource less what factors are driving more insourcing. The main reasons to insource are faster time-to-market and/or improved quality outcomes (49%), less expensive than outsourcing (43%) and the challenge of working with service providers in Agile/DevOps teams (40%).
• The top three drivers for organisations planning to outsource (more) are focus on core business, access to resources/talent and cost reduction. Client and service provider perspectives are largely aligned with the exception of ‘more scalability to business needs’. While clients rank this driver 4th in importance with 44%, service providers only consider it the 7th most important driver with 21%.
• Overall, respondents are satisfied with their IT service provider(s), with 91% of all 517 IT sourcing relationships being rated as satisfactory, 5% somewhat unsatisfied, 3% unsatisfied and only 1% very unsatisfied.
• On the overall ranking for general satisfaction, Atos and TCS are the highest ranked providers with a joint score of 84%, followed by Computacenter (82%) and Telenet (80%). Cronos, EY, HCL and Tech Mahindra enter the ranking for the first time in 2020. Our full report ranks the service providers by six different IT domains (applications, infrastructure, network and telecommunications, end-user services as well as cloud rankings for software and infrastructure cloud platforms.
• We asked participants about the model they are using to integrate their cloud providers into one seamless service. 44% cite that there is a hybrid model between the client and one or more service providers, 31% say they are integrating all cloud services internally and 17% assign this responsibility to one of their service providers.
• The use of Intelligent Automation (IA) continues to increase in the BeLux region with 49% of respondents already using these technologies (up 10% from last year) and another third planning to adopt it. The financial services sector continues to be well ahead of other sectors with 68% confirming they already use IA while the public sector lags behind with one in five respondents revealing they have no plans to adopt it.
• Service providers reveal that twice as much improvement is required compared to the client self assessment for transition/change management, service management/integration and business relationship management/demand forecasting governance capabilities.

• Over the next two years more outsourcing is predicted for France with 59% of organisations planning to outsource at the same rate or more. This is one of the lowest levels of outsourcing plans across Europe, partially caused by the high percentage of organisations that are unsure of their future outsourcing intentions (27%), showing a high degree of uncertainty in France. Plans to insource decrease by four percentage points to 14%.
• We have asked the 14% of organisations that plan to outsource less what factors are driving more insourcing. The primary reason to insource is the need to increase the speed/quality of delivery (cited by 77%), followed by the increase in the total cost of outsourcing (62%).
• The top three objectives for IT outsourcing from a client perspective are cost reduction, focus on core business and access to resources. Service providers also rank cost reduction the most important factor in their clients’ outsourcing decisions (cited by 75%), however they consider focus on core business only half as important (33% compared to 66% of clients) and underestimate the importance of access to resources.
• The service provider community continues to show a strong overall satisfaction level with 91% of the clients being somewhat to very satisfied with the 611 evaluated IT sourcing relationships.
• On the overall ranking for general satisfaction, TCS and Google are the highest-ranking providers with a joint satisfaction score of 80%, followed by LTI (78%), Amazon Web Services (AWS) (77%) and Microsoft and Salesforce.com (both at 76%). The average satisfaction score of 71% increases by just 1% in comparison with last year.
• Across the three different IT domains, the highest-ranking providers are:
  • For application development, maintenance, testing and SaaS: TCS, LTI and Salesforce.com
  • For datacenter, managed infrastructure & hosting: Amazon Web Services (AWS), HCL and Microsoft
  • For end-user services & collaboration solutions: Capgemini, Google and Microsoft
• The majority of organisations (86%) are already using Agile as their preferred delivery model with another 13% planning to use it. A significant increase in the use of DevOps (+38%) is also expected in France.

• During the next two years outsourcing will continue to increase in Spain, with 83% of organisations planning to outsource at the same rate or more, up 7% since 2018. In comparison with the rest of Europe, Spain has one of the lowest levels of insourcing (6%). On an industry level, most outsourcing growth is expected in the health care sector and public sector.
• Access to resources, service quality and cost reduction continue to be the three most important factors driving outsourcing. However, Access to resources, the main outsourcing driver for clients, is ranked penultimate in importance by service providers. Innovation is considered the least important driver by service providers, cited by only 15%.
• In general, clients are very satisfied with their service providers, with 94% of the 837 IT outsourcing relationships evaluated as satisfactory. Spain continues to have the largest degree of client satisfaction in Europe.
• Everis and DXC Technology are the highest ranked providers for 2019, with a shared satisfaction score of 80%, followed by Ibermática, Amazon Web Services (AWS), Accenture, Salesforce.com and Deloitte (all five with 79%). In comparison with the rest of Europe, Spain continues to have one of the highest levels of client satisfaction. New entrants in this year’s study include: Econocom, Getronics and GFI.
• Adoption of Agile methodology continues to grow in Spain (12% since last year) and both the financial services sector and public sector experience significant increases of 22% and 15%, respectively. Less than a third of organisations are using DevOps as their preferred delivery model. However, 43% of organisations are planning to use DevOps, with a significant increase expected across all sectors, in particular the financial services sector (55%).
• Robotics and AI present a great opportunity in Spain, with a significant proportion (81%) planning to increase their use of these technologies in the coming year. The public sector is lagging behind, with only 24% of organisations using Robotics/AI (less than half the average) and this sector in particular will experience the biggest growth (47%).

• Over the next two years outsourcing will continue to increase in the United Kingdom with 71% of organisations planning to outsource at the same rate or more, with the percentage of organisations planning to outsource more increasing by five percentage points in comparison with last year. For the first time since 2015 the number of clients planning to outsource less (insource) has decreased dropping from 22% to 16%.
• Clients indicate the main rationale for insourcing is driven by “the need to retain and own their own intellectual property” (75%) together with a shift towards more “agile ways of working” (75%).
• The adoption of agile has become mainstream, however ability to implement and sustain remains patchy, particularly in traditional organisations. Challenger organisations increasingly using agile to improve speed to market.
• Entry barriers are reducing for digital age service providers. Organisations are increasingly open to work with smaller players, particularly those offering niche products and solutions.
• Cost reduction is the most important outsourcing driver for the fourth consecutive year, followed by focus on core business and access to resources. Service providers place even more importance on cost reduction and almost twice as much importance on business transformation as reasons for why their clients outsource their IT services.
• An increasing number of organisations are finding ways to decrease the run budgets to invest in change.
• Despite a decrease of 4 percentage points since last year, the service provider community continues to show a strong overall satisfaction level with 84% of the clients being somewhat to very satisfied of the 766 evaluated IT sourcing relationships.
• Hexaware and Amazon Web Services (AWS) are the joint highest-ranking providers with a general satisfaction score of 78%, followed by NIIT Technologies (76%) and TCS (75%).

Across the four different IT domains, the highest ranking providers are:

• For application development, maintenance, testing and SaaS: Hexaware, NIIT Technologies and TCS
• For data centre managed infrastructure and hosting: TCS, Amazon Web Services (AWS) and Capgemini
• For network & telecommunications: Orange, Vodafone and BT
• For end-user services and collaboration solutions: TCS, HCL and Microsoft

Manish Khandelwal, IT Transformation expert at PA Consulting, says: “Technology driven challenger organisations are transforming the way services are delivered and consumed across sectors. Technology investments are growing, presenting significant opportunities for established service providers and new entrants with differentiated offerings. Service providers that are able to transition from traditional delivery and commercial models without compromising the service quality are looking at an exciting future ahead.”

• More than two out of five organisations (42 percent) in the Netherlands are planning to outsource more of their IT in the next two years, with most outsourcing to be expected from the financial services sector (53%). Eleven percent of Dutch organisations are planning to increase insourcing in the coming years.
• The primary reasons for Dutch organisations to outsource their IT services are focus on core business, improvement of service quality and cost reduction. Overall, more than 90 percent of organisations cite that they have (partly) achieved their outsourcing objectives.
• Innovation is an increasingly more important factor for clients (cited by 43% as a key driver), but four out of five participants state that they are not achieving the expected innovation through outsourcing.
• Cloud continues its growth with cloud providers such as Amazon Web Services (AWS), Microsoft (Office Suite and Azure), Salesforce.com having over 80 contracts that have been evaluated in this year’s study.
• 70% of clients indicate that security and privacy concerns are the main barriers to further cloud adoption; service providers do not share this concern as only 30% of providers indicate security and privacy is a barrier.
• The service provider community continues to show a strong overall satisfaction level with an increase in general satisfaction (2% for the whole market compared to last year) and an impressive 88% of the clients being somewhat to very satisfied with the 554 evaluated IT sourcing relationships.
• On the overall ranking for general satisfaction, Amazon Web Services (AWS) is ranked number 1 with a satisfaction score of 84%, followed by Centric (79%), TCS and Accenture (both at 78%) and Salesforce.com (76%).

Across the 4 different IT domains, the highest ranking providers are:

• For application development, maintenance, testing and SaaS: TCS, Accenture and Salesforce.com
• For datacenter managed infrastructure and hosting: Amazon Web Services (AWS), Centric and Microsoft (Azure)
• For network & telecommunications: Vodafone, Orange Business Services and KPN
• For end-user services and collaboration solutions: Centric, Microsoft (Office Suite) and Cegeka