RESULTS FROM THE 2017 UK IT OUTSOURCING STUDY
The UK IT outsourcing market continues to grow slowly as mature clients rebalance in-house and outsourced delivery
The UK IT Outsourcing market continues to mature and grow slowly, although sentiment is more positive than . There is continued appetite for UK companies to rebalance their outsourced and in-house delivery models. Whilst 35% of respondents are planning to outsource more, 22% are planning to outsource less, driven in part, we believe, by the increasing need for agility.
Automation, AI, and robotics present a significant opportunity to both clients and service providers, and will be a key factor in determining future winners and losers.
Overall satisfaction levels with IT service providers remain high, but the ratings for individual providers continue to be volatile as they respond to changing market pressures and consolidation.
ABOUT THE SURVEY
The 2017 UK IT Outsourcing Study, conducted by Whitelane Research in collaboration with PA Consulting Group, investigated more than 800 unique IT outsourcing contracts, representing over £15bn of annual IT spend across more than 250 of the largest users of IT services in the UK.
It is the most comprehensive client study covering IT outsourcing and IT service provider performance across the UK.
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 and 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.
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Overall the market will continue to grow with 35% of clients planning to outsource more (and 22% planning to outsource less).
Cost reduction (69%) and business transformation (64%) continue to be the top reasons driving increased outsourcing.
There is continued appetite for mature clients to rebalance their in-house and outsourced services as 22% of clients plan to outsource less, reflecting the same proportion (22%) who see outsourcing as a barrier to increased agility.
Robotics, automation and AI present a significant opportunity to clients and providers alike. Only 30% of respondents are realising material benefits in this space. The opportunity appears significant for all parties but only after a complex journey. The technology and providers in this market will likely face consolidation and drop out as the market matures. Expect change.
Cloud providers such as Amazon, Salesforce and Microsoft generally score highly on customer satisfaction as clients value the flexibility and savings available from standardised cloud offerings. Conversely, ERP solution providers suffer across a range of factors including flexibility, proactivity and price.
20-25% of clients consider their sourcing strategy, transition and integration capabilities to be unsatisfactory – risking significant loss of benefits through poor execution at the outset.
An established group of highly ranked providers (such as TCS, Cognizant, Computacenter) have been joined by rising providers (such as Amazon and Google). However, some traditional providers are experiencing mixed fortunes or a sustained decline in customer satisfaction.
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