Outsourcing in 2020

During he last few days of 2015 the National Outsourcing Association (UK member of European Outsourcing Association) performed the NOA’s “Outsourcing in 2020” survey.

The results are in and they reveal a wide range of intriguing insights on how new trends and technologies are going to transform the face of modern outsourcing. What’s more, the findings paint an interesting picture of what the new outsourcing ecosystem is going to look like in the build up to the year 2020 and beyond.

I wanted to give you exclusive access to these findings, ahead of them being published in the Outsourcing Yearbook in early 2016.

Let’s get started…

Methodology

134 organisations participated in our research (roughly one-third buyers, one-third service providers, one-third support organisations). 25% of these organisations had 50,000+ employees – on the buy-side, 50% had a headcount of 10,000 or more, while company size on the supply-side was more varied.

The vast majority of those surveyed were C-suite, Directors, Heads, Presidents, Senior Vice Presidents, Managers and Specialists. Overall, 35% saw ITO as their main area of focus, while 33% said BPO. Customer service, FAO, HRO, KPO, LPO and local government were also given as focuses.

Key Findings

How will your company’s use of outsourcing change over the next five years?

  • 70% of buyers plan to increase their use of outsourcing, with 35% planning to significantly. 10% plan to decrease their outsourcing slightly; none plan to decrease the amount they outsource significantly.
  • 83% of suppliers expect the outsourcing industry to grow, with 37% expecting it to grow significantly. Just 4% expect the outsourcing industry to get smaller.

What business issues are increasing your company’s use of outsourcing?

  • Overall, organisations said they outsourced primarily for the following reasons:
    Cost savings (35% cited this as the prime driver for outsourcing); improving the customer experience (23%); transitioning from legacy IT to as-a-service models (17%).
  • This differs from the traditional prime reasons why companies outsource: Cost savings; increasing operational flexibility; accessing new skills.

How progressed are you with the following business activities? How significant will they be in 2020?

  • Overall, respondents said they are most progressed with offshoring, cloud and process transformation
  • 83% of all respondents believed robotic process automation (RPA) will be of greater significance in the next decade. 80% said the same of artificial intelligence (AI).
  • 44% of suppliers said AI will be more of a game-changer than RPA. Just 7% on the buy-side agreed.
  • 61% of buyers thought backsourcing will be less significant in 2020, with 57% of suppliers saying the same. 59% of buyers thought reshoring will be less significant in 2020, while 61% of suppliers said the same of offshoring.

Key changes to contracting in 2020

Our research showed strong expectation on both sides that the following changes to contracting will occur:

  1. Contract values will be based on outcomes
  2. Service providers will be contracted as service integrators sharing risk
  3. Procurement will become a more important part of the contracting process
  4. Notice periods will become significantly shorter

Conclusions

There’s a new outsourcing ecosystem on the horizon – one that will be defined by the ability of organisations to provide customer-centricity and handle data. We’ll also see increased investment over the next five years in many areas: data analytics, digital innovations, robotic process automation, artificial intelligence, to name just a few.

Outsourcing as a practice is set to become more dynamic, more collaborative and more competitive – the speed and willingness with which outsourcers and their service providers adapt will determine the winners and losers in 2020.

For the full picture, read NOA CEO Kerry Hallard’s article Make way for the new outsourcing ecosystem which was featured in The Times’ “Future of Outsourcing” supplement this month.

These are just the basic findings. The full report will be published in the Outsourcing Yearbook, schedule for release in Q1 2016. To ensure you receive your free copy, head over to the NOA website.

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s