IT insourcing: What do you need to know?

Following decades of businesses outsourcing IT functions and business processes to external suppliers, a recent trend is for some of these functions and processes to be brought back in-house, i.e. insourced. A recent IT sourcing study reports that more than a fifth of the top IT spending organisations in the UK are planning to ‘outsource less and insource more’.

Drivers for insourcing

Insourcing is sometimes intended to enable businesses to regain or improve their control over critical functions and processes. Whereas a particular function may have once been perceived as low level and part of operations, rather than strategic, in fact that function and the decisions it takes can have far reaching impact on a business. One such example would be a function such as IT architecture, which affects IT policy, strategy, and security.

Insourcing is also perceived to bring benefits by way of increased flexibility. Outsourcing agreements do accommodate change on an ongoing basis, however they typically prescribe a structured change process which requires direct engagement with the outsourced provider, and a cost impact for the customer depending on the nature of the change. Whereas change which is primarily an internal business function activity is perceived to allow a greater degree of control in determining the nature of the change, and potentially limiting the cost impact.

It is worth mentioning that the simplified purchasing route for available technologies, with the increasing prevalence of ‘as a service’ and cloud offerings, has increasingly allowed businesses to retake activities which previously would have relied upon legacy technology and infrastructure and, therefore, the outsourcing suppliers.

Cost reduction is another common reason for insourcing. Insourcing removes the supplier margin and labour arbitrage, often a driver of outsourcing, is losing its appeal with increasing costs in outsourcing centres, along with the rise of automation and robotics which is reducing the labour component of certain activities and functions.

Insourcing challenges

An insourcing will potentially require some or all of recruitment and training of personnel, or transfer of personnel; amendments to processes; data transfers, systems reconfiguration, user access modification; IT licences reviewed and assured; updated governance; new reporting, and so on.

Operationally, the risk to a business predominantly relates to the new operating model that will be implemented post the insourcing. Clearly understanding and documenting the scope of the new, insourced activity, and how that activity will align internally within the business and with ongoing third party providers, is essential. Not only is there a risk that the new operating model might create deficiencies in operations, the transition from outsourced to insourced may have a detrimental business impact itself.

Insourcing typically, though not always, will require a partial, rather than complete, insource of an outsourced activity. The extraction of a part of a particular function or activity has attendant challenges. From a contractual perspective, if insourcing is taking place during the lifetime of an outsourcing agreement, while these agreements typically anticipate partial termination they are not always prescriptive in terms of what can be terminated and moved elsewhere. Even if the customer is granted complete flexibility by the agreement to terminate portions of the service, the practical implementation of a partial termination in terms of cost allocation and impact on remaining services often means that there is a meaningful barrier to insourcing.

Outsourcing agreements are evolving to reflect a greater trend towards insourcing. Businesses themselves are increasingly focused on the potential future structure and operating model design, and are writing in to agreements specific, potential changes. A greater flexibility is also being achieved by agreements being split, or modularised to reflect individual components of service, for example within an IT infrastructure arrangement having separate terms and conditions stretching from legacy, dedicated IT components, through to public cloud, via infrastructure as a service or platform as a service.

Personnel issues/TUPE

A key consideration will be the extent to which key employees, knowledge and skills are able to be transferred back to the business – this will clearly be more of an issue in relation to outsourced functions which involve significant employee support. An insourcing is likely to be a transfer for the purposes of TUPE, but this is very much an issue to be considered on a transaction by transaction basis. It may be possible to structure the insourcing so as to determine the application (or not) of TUPE, depending upon the outcome required by the business, although this of itself may be subject to negotiations.

The impact of the existing outsourcing contract will need to be taken into account. Even where TUPE does apply so as to transfer the assigned employees back in-house, there is a risk that employees could decide not to transfer by opting-out of the transfer. This is particularly a risk for senior or key employees who are likely to be more in demand in the wider market place. The fact of the transfer effectively gives an employee an opportunity to resign on the date of the transfer without having to give notice of termination – this may be an attractive option for some, but clearly could have a detrimental impact on the future provision of the relevant function or process.

And where employees do transfer under TUPE, the regulations protect their terms and conditions of employment, giving the business little scope to make changes to these at the point of transfer or for an undetermined period following the transfer. This is a significant restriction on the business, but one which may be subject to change in the future following the vote in favour of Brexit.


The current trend of insourcing is probably best seen as another phase in the outsourcing/procurement cycle. Indeed, despite an increase in insourcing, outsourcing is still on the rise globally. As business needs evolve, so will their requirements to outsource functions to dedicated suppliers or insource functions for some of the drivers set out above. The key for organisations will be to have the contractual flexibility to make these changes, and a clear operational understanding of the related delivery models and risk.


Source: insourcing: What do you need to know? 


Is Integration-as-a-Service the IT Model of the Future?

Shaun Daly, partner with outsourcing consultancy Sourcing Advisory Services, discusses how the third-party managed sourcing model–which he calls multi-sourcing Integration-as-a-Service–is poised to accelerate as the enterprise IT model of the future. He further explains what might drive adoption to this model as well as the pros and cons involved.

There’s little doubt that multi-sourcing has become the dominant model for enterprise IT services. The average U.S. IT shop is working with 13.5 service providers overall, according to Gartner. But managing multiple providers remains a challenge for most IT organizations.
Some IT organizations, like the State of Texas Department of Information Resources, have decided to outsource the multi-sourcing management to an external master service integrator.

The idea was met with warranted fox-guarding-the-henhouse concerns by many industry watchers. But Shaun Daly, partner with outsourcing consultancy Sourcing Advisory Services, says adoption of the third-party managed sourcing model–which he calls multi-sourcing Integration-as-a-Service–is poised to accelerate. talked to Daly about what might drive adoption of multi-sourcing integration services, the pros and cons of the model, and what it means GM is getting out of the multi-sourcing management game.

Doesn’t engaging a third party to manage the IT service portfolio just add another layer of complexity to the arrangement?

The challenge for determining scope of what should be sourced or retained internally remains the same for multi-sourcing service integration. The question remains: who is best positioned to treat it as a core competency and, therefore, should be better positioned long-term to provide this service.

Our experience has shown that a select group of the suppliers have developed a best-in-class approach to ensure the enterprise receives a more flexible and healthy service. We’ve seen that elevating service integration as a discrete service delivery function actually addresses and increases value accretion by exposing the complexity, the misalignments, the overlaps and the gaps.

Historically, in a single- or multi-sourced environment, the real complexities are papered over. But “your mess for less” is an unacceptable answer for modern competitive firms. A coordinated service integration solution is necessary to realize the full benefits of best-of-breed multisourcing. Eliminating duplication and making processes consistent and repeatable are the keys to performance management.

Are some IT organizations capable of managing a multi-sourced environment themselves? What capabilities must they possess to do so effectively?

Yes, some IT organizations have the scale, experience, and maturity to provide integration services. However, much like the component services being outsourced, service integration is not typically a core competency of the client. It is challenging for clients to access and retain the skills required to provide integration services, and service providers are generally able to better leverage process and technology to maximize the efficiency of the delivery model.

10 Key Questions to Assess Application Outsourcing Maturity

It is more likely that, on a case-by-case basis clients are able to provide certain elements of the integration work–such as chargeback, asset management, or software license management. The interplay between the role of the multisourcing service integrator and the retained governance functions of the client will be a key planning factor in shaping the scope of services for the MSI.

How much should an IT leader expect to pay for third-party multi-sourcing integration services?

We’ve seen the multi-sourcing service integration as a self-funded component of the deal structure; some clients make self-funding a requirement.

When we started developing this approach, we assumed that it would require a client to invest more money and that the benefits would eventually offset the added costs. The multi-sourcing integration layer uncovers more than just labor arbitrage savings; it’s designed to rationalize out inefficiencies in process, revealing a second layer of savings as great or greater than the first. So the overhead and increased investment on process and tools are usually offset by delivery cost reductions.

In addition, the segmented delivery structure increases competition by expanding the service component provider market to Tier 2 providers. And the contractual flexibility built into the plug-and-play deal structure encourages a focus on competitive market rates through the contract term.
You helped the state of Texas develop its new multi-sourcing service integration model. Why did they take a chance on this unproven, emerging model?

The state was midway through a significant change initiative and needed to recover within a restricted budget. The benefits of the multi-sourcing service integration model addressed the state’s critical objectives in the short and long-term: operational visibility, contractual flexibility, and efficient pricing. The alternatives–a single provider or multiple providers without Integration-as-a-Service–did not meet these critical objectives.

When will you know the new model is working in Texas? What will be the key indicators of success there?

We get asked this a lot. Ultimately, like any sourcing initiative, the key indicator will be that the state agencies are receiving the services they have contracted for within the context of a client’s objectives. All indications are that the model is working and benefits are evident in the early stages of a recently transitioned service environment.

Are there any other high profile examples of the third-party integration model for outsourcing at work?

There are a number of organizations, such as General Motors [GM], that have successfully implemented elements of the multi-sourcing integration structure over many years. There have been recent announcements similar structures within the public sector in the U.K. and numerous examples in commercial environments, such as at Rolls-Royce. Different models and methods of implementation are being developed and tested by IT service providers.

But GM, which managed much of its multi-sourced IT itself, recently announced plans to bring much of that work back in-house. Is that a rejection of multi-sourcing and service integration?

My understanding is that GM is moving from a predominantly outsourced to a predominantly insourced environment. Whether an organization is outsourced or insourced, service integration is a critical function.

You say that the adoption of ITIL and process improvement programs is accelerating the trend toward third-party management of multi-sourced environments. But some industry watchers have argued that these process frameworks fail to take hold when implemented by outsourcing providers. How do you address that?
It is very important that the goals and the plan of adoption of the service integration model are aligned both with the maturity of the service component provider(s) and the operational dynamics of the client environment. Most implementation models focus on staged introduction and adoption, with pilot programs to confirm the value at each stage.

Process maturity is not a one-step formula; it is a method of approach to maintenance–constantly realigning and testing in a changing environment. A well-documented contemporary service management manual is critical to maintaining alignment among all the parties.

Who is best positioned to offer multi-sourcing integration services for enterprise IT? Service providers? Consultants? And is it important that the integration provider is independent and not providing an actual IT service?

It is beneficial to have an integrator that is both knowledgeable and experienced providing the component services. Sourcing advisors can help clients develop deal structures, but it’s the service providers that have experience delivering market-based enterprise IT services and are best positioned to provide Integration-as-a-Service.

The integrator can be one of the IT service providers; however, to optimize the model and benefits of the third-party ‘independent auditor,’ we recommended that the service manager only provide the integration services.

Clients may start down the path multi-sourcing service integration deal structure by restructuring existing agreements to carve out the MSI role and still have the incumbent provider provide service integration and component services. But over time, we recommend that the integrator be independent to perform oversight functions such as process compliance, service-level management, and bill reviews.

How does this work in terms of deal structure? Does this get the IT leader get back to the place of “one throat to choke” when things go wrong?

Accountability and service responsibility have moved from one entity controlling a process to a series of entities–both within a client environment and among service providers–working closely together to ensure a client’s needs are addressed. The role of a facilitator requires all parties to think through what this means in terms of performance, reporting, proactive maintenance, responsiveness, as well as who will coordinate addressing problems.
In general, the multi-sourcing integration service provider is responsible for delivery of end-to-end services to the client and thus owns the day-to-day client management interface role. The service component providers play a critical role in the provider-client relationship as they have direct touch with the end users on a daily basis and participate with the integrator as needed in management meetings. The balance of roles and responsibilities is key. Both the integration provider and component providers participate in governance and have active client relationship management responsibilities to ensure customer satisfaction.

What are the biggest mistakes you’ve seen in implementing a multi-sourcing integration service layer.

Figuring out the operational detail of the inter-party Operating Level Agreements (OLAs) after contracts have been awarded is a mistake. It’s also critical to distinguish between shared and related performance metrics across multiple contributors to service delivery. Finally, it’s key to institute the necessary levers in the deal structure to enforce alignment between the shared service management manual and the OLAs between parties.

This approach will have to be refined and updated as all the parties become more adept at managing in today’s complex environments.

When will multi-sourcing management reach a point of maturity and what will that look like? Or are we due for a swing back in the direction of single-sourced environments?

We don’t expect a swing back to single-sourced environments, but we do expect clients to demand more sophistication in addressing a multi-sourced environment. With the proliferation of new service offerings such as cloud computing and the growing need for greater plug-and-play flexibility in sourcing portfolios, the days of one particular service provider comprehensively addressing a client’s needs are behind us.

Source: Integration-as-a-Service the IT Model of the Future? By Stephanie Overby

Why Companies Have Stopped Outsourcing IT

Since the mid-1980s, when information-technology outsourcing began to take off, companies have been pursuing it as a means of cutting costs, reducing capital budgets and increasing efficiency. A broad range of IT services were frequently outsourced, from data-center operations to application development to user support. IT outsourcing still drives about 60% of the entire services sourcing industry, according to a Deloitte survey.

But it is a practice that is in decline for all but the most commoditized IT activities—and even the outsourcing of those is at risk.

Why has the tide turned against IT outsourcing? The idea only made sense when companies viewed technology as a cost of doing business. The rise of digitization, big data analytics and cognitive technologies has made IT strategic again. And it is often difficult to get innovative, differentiated outcomes when you turn IT over to someone else.

Even in the heyday of outsourcing, some companies realized this. For example, when a consumer-products company outsourced IT seven years ago, it exempted key functions from the deal. The company held on to such responsibilities as IT innovation, system design and architecture, and decision-oriented applications. The company’s chief information officer felt that they were too critical to its success to outsource.

Now some of the biggest previous proponents of outsourcing have reversed course. One manufacturer, for example, brought its application development activities back in-house a couple of years ago after decades of outsourced IT. It resulted in the hiring—or rehiring—of about 10,000 IT workers at the company. That company’s chief information officer argues that true innovation results from IT professionals being tightly aligned with the company’s strategy, and that is difficult to pull off when IT people work for a different company.

Data-center operations and end-user support are perhaps the last frontiers for outsourcing, and indeed these have become commodity activities. Keeping servers and networks running, as long as it is done in a reliable and secure fashion, doesn’t offer many opportunities for competitive advantage. And does it matter who helps a user recover a lost password?

Even these activities, however, are moving away from outsourcing. It is not that they are viewed as strategic, but that technology is providing other options. Software-as-a-service and cloud-based operations mean that companies decreasingly have data centers, so there isn’t anything to outsource. And both data-center operations and user support are increasingly being automated, so there is much less need for outsourced human support. “IT process automation” capabilities are offered by a variety of vendors both large and startup. And cognitive vendors are beginning to offer automated user interaction capabilities—like Siri for getting your computer working again.

If your company simply doesn’t believe there is value from doing IT differently and better than your competitors, then outsourcing may still be for you. But it is getting more difficult to defend that argument.

If we live in the digital age, do you want your digits to be the same as everyone else’s?

Source: Wall Street Journal-Why Companies Have Stopped Outsourcing IT by Tom Davenport

Where next for IT outsourcing?

IT outsourcing is emotive, but it is hard to find a company today that doesn’t do it in some way.

Outsourcing is also changing fast. In the past, IT outsourcing was a case of handing over the running of the back office, with suppliers offering to manage “the mess for less”.

This extended to companies choosing to have mess managed for even less in offshore locations, particularly India, where the cost of labour is lower.

But developments in cloud computing, automation software and big data technology are changing the way outsourcers offer services and how businesses consume them.

Traditional application development and maintenance outsourcing is being shaken up as a result of cloud computing and the software as a service it brings. Offshore business processes and IT services are being replaced by automation technology, reducing the need for low-cost, full-time staff to run them. Meanwhile, big data is turning suppliers into information gatherers and translators rather than software maintainers.

Another change taking place is the digitisation of business, which is placing difficult demands on in-house IT resources. Businesses want support in the back end to free up staff for digital projects at the front, where their business knowledge is vital.

All this means IT outsourcing is set to continue, but will change in its form.

Computer Weekly’s CW500 Club recently discussed thefuture of IT outsourcing. CIOs from Croydon Council, Cambridge University Press and clothes retailer Monsoon Accessorize described some of the changes happening now and their impact on IT outsourcing.

Public sector is open to change

The fact that the public sector is transparent is the reason we hear so many public sector IT outsourcing horror stories, not simply because there are more of them. Private sector companies, on the other hand, are unlikely to publicise failed outsourcing arrangements. But outsourcing in the public sector does have its challenges.

Outsourcing is an attractive cost-cutting mechanism for any organisation forced to cut costs. The London Borough of Croydon is a good example of an organisation facing this, as the council has to cut £100m from its budget over the next three years.

Nick Roberts, head of ICT at London Borough of Croydon, and former president of local authority user group Socitm, says while many commercial organisations are coming out of austerity and are able to invest, local government is only about halfway through the process.

Outsourcing provides cost-cutting opportunities, so public sector bodies, with seemingly impossible austerity targets, will inevitably look to the market for options. But while outsourcing contracts promise cost savings, it seems they are failing to support the future plans of customers, despite the importance of IT in these plans.

Roberts says government organisations have had bad experiences with large outsourcing contracts, many of which were set up with the knowledge of what was required from day one, with the supplier offering a competitive price to deliver.

“But then day two comes and you have to change things, but this is a commercial process,” he says.

The supplier has its own targets, so making changes to the agreed contract is not easy.

He says this situation inevitably causes problems, with the inability to change being “difficult to manage in a world where the only constant is change”.

Roberts, not surprisingly, “has a few gripes” about traditional outsourcing contracts.

“They focus on the current operational state and are not built for change,” he says. “That change process is always mired in a commercial process. The business wants to change, but it can’t because it has to go through this commercial process.”

He says contracts reinforce this because they are written to measure success in terms of support rather than the ability to change and be flexible.

But cloud is bringing change, according to Roberts. “A lot of the contracts in place are effectively in-house datacentre support contracts. But the big change is the move to native cloud, which takes that out of the equation,” he says.

For example, enterprise applications that were kept up to date by suppliers are not relevant with software as a service. The hardware estate is also not managed in the same way, with staff using a large number of different devices.

IT that supports the customer-facing operation needs to be in-house. The in-house teams that understand the relationship with customers have vital skills for IT today, because IT is an interface with citizens rather than just underpinning systems.

Roberts says increased multi-sourcing mixed with in-house services and shared services will be the make-up of IT services going forward.

Where shall I take my IT?

While outsourcing changes, so do the locations from which it is delivered.

Mark Maddocks, CIO at Cambridge University Press, says the medium-sized publisher is in the process of moving from print to digital publishing, which is a big step for an organisation that is almost 500 years old.

Cambridge University Press publishes academic journals and books and has English language courses and education businesses across the world. Most of its sales are outside the UK.

The company has significant outsourced operations, many of which are in offshore locations.

Maddocks says the company uses four types of outsourcing and, following success with the approach, has increased its offshore operations over the last five years.

“We have a traditional outsourcing model. We buy services where we are looking for scale and cost reduction. Here we are not really looking for differentiation and I would be quite happy if all our competitors used the same service,” he says. “This works a treat when you have a really clear interface and when you can measure it. We use this for all sorts of things, such as hosting.”

Spend time building relationships with teams offshoreMark Maddocks, Cambridge University Press

The company also has offshore captives.

Its first was in Manila, Philippines, where it started around five years ago with 40 staff focused on software development and testing, supporting its online digital product. Currently, it has just over 250 people and expects over 300 by the end of 2015. The Manila centre now has 18 seperate teams carrying out a wide range of internal services.

According to Maddocks, it is “cost-effective, low attrition and wage inflation is not as bad as people say”.

But there are disadvantages. Maddocks says it requires management time and overhead. “They are my team and I still have to manage them.”

The company’s third model is offshore software development in India, with development centres in Calcutta and Hyderabad. These are with two very large Indian IT services providers and both centres have about 50 people in them.

The Calcutta centre supports the organisation’s learning management platform, which is an English language resource used by about 500,000 people worldwide.

“I put this in Calcutta, rather than Manila, for access to skills. There was a particular technology stack I did not think I could bring in quick enough in Manila,” says Maddocks.

“We have built a long-term relationship and are in the fourth year of working with that supplier. In Hyderabad we are in the third year of a deal to run one of our internal systems,” he adds.

The fourth model, a hybrid of traditional offshoring to a supplier and a captive, has just been launched through a business process outsourcing operation, where it shares a building with the existing team in Hyderabad.

“We have big growth plans and will expand from about 10 people to over 100 by the end of the year,” says Maddocks.

This model uses an Indian partner to help the company recruit for a centre that uses a traditional supplier/customer model, but will have the ability to change to a captive centre easily if the organisation wants it to, he says.

His advice to CIOs thinking about outsourcing and offshoring is to “be really clear what your aims are and think beyond cost reduction and getting rid of a problem”.

“Think about accountabilities and make sure teams have ownership of the relationships with the people you work with and have good offshore leads,” he adds.“Spend time building relationships with teams offshore.”

The day-to-day IT grunt and robust solutions will be provided by suppliersJohn Bovill, Monsoon Accessorize

It is clear the changing role of the IT department is moving it from the dark depths of the basement to the shop window.

Retail’s speedy and necessary take-up of digital customer services is a good example of a sector where IT is split in two. Today there will be teams, probably outsourced, supporting legacy systems, while in-house IT, which understands the business, focuses on providing customer facing apps and understanding customer behaviour through data.

John Bovill, IT and e-commerce director at Monsoon Accessorize, says the retail industry is in a state of flux.

“People are interacting with our company in different ways and this has put IT at the front of house,” he says.

About 50% of Monsoon Accessorize’s customers have first contact with the store via the website and the other 50% through the store, but 75% of final transactions are still in-store.

These changes in customer behaviour meant in-house IT had to change. Resources can no longer focus on the systems that keep the company running but must be dedicated to attracting customers.

In the past, says Bovill, stock was sent to outlets and sold on the high street to consumers  physcially browsing in the stores. But today it is about drawing customers in, which means understanding them.

“The corporate IT function as we know it in our industry will be very different. Consumerisation will turn it on its head. It will be analytics-based and all aboutunderstanding data and using it in an intelligent way,” says Bovill. “The day-to-day IT grunt and robust solutions will be provided by suppliers.”

Source: computerweekly-Where next for IT outsourcing? by Karl Flinders

Made in America: Are outsourced jobs really coming back?

Decades of outsourcing of American jobs overseas has drastically altered both the country’s economy and the lives of millions. Cheaper labour in developing nations meant that many jobs, like telecommunications and factory work, were sent abroad. In 2003, 150,000 jobs went overseas, and only 2,000 came back.
Once-proud manufacturing centres in countless American towns are now empty, and the workers forced to find new jobs. But is the tide turning?
The BBC’s Natalia Antelava investigates an emerging trend that sees companies bringing the jobs they have outsourced back to the US.
Filmed and edited by David Botti

See more at: BBC-Made in America: Are outsourced jobs really coming back?

Outsourcing Market – 2014 Review/2015 Outlook

Market trends

John Keppel, Partner and President, ISG North Europe provides an overview of the 2014 outsourcing market, and shares predictions for 2015.

We saw confidence in the European outsourcing market pick up in the second half of 2013, and this continued to improve throughout 2014. In fact, 2014 is on track to be one of the strongest – if not the strongest – years for outsourcing in EMEA in a decade.

One of the most interesting things we have witnessed this year is that outsourcing is no longer a Northern European phenomenon. Activity has become more proliferate across the continent – particularly in France, Spain and Italy. In the third quarter of this year, French annual contract value (ACV) was up 250% on the same period last year, while Southern Europe reached its highest ever level of ACV. By contrast, the mature UK market broadly remained stable.

We’re also seeing a growing move towards deriving greater value from contracts. Whether this is through Service Integration and Management (SIAM) or utilising Total Business Management (TBM) tools, CIOs are beginning to step away from simple IT management and are moving towards a role that has a greater focus on business alignment, which is critical for maintaining their relevance to the organisation.

The Global Business Services (GBS) function is also becoming more prominent. Although still in its early stages, this will become more important to organisations. What will drive success, however, is the function’s ability to deliver results – with a framework in place that drives, manages, risk mitigates and controls execution.


There has been a resurgence in ITO, which is somewhat unsurprising given ever increasing volumes of IT consumed. Indeed, in the third quarter of 2014, the volume of ITO contracting in the EMEA region hit an all-time high, with contract counts up 16% on the previous year.

More surprising is the pronounced decline in Business Process Outsourcing (BPO) activity. BPO ACV grew steadily through the global downturn as companies looked to save costs across the organisation, but as the economic outlook has brightened, BPO values have fallen. In general, EMEA has not been quick to adopt large HR, F&A and other BPO towers but the growth of cloud and other new technologies could see a wider take up of business process as-a-service in the next couple of years.

Public Sector

The UK public sector has continued its outsourcing journey; spending nearly double the commercial sector, mainly through the award of larger, higher-value contracts. In contrast to the commercial sector, the public sector has seen a rise in mid-market contracts, as a result of the complexity of the services required and a lack of appetite for utilising cheaper, offshore resources. It will be interesting to see, over the next two years, whether the drive to procure services from small to medium enterprises via the G-Cloud will cause a shift to smaller contracts. The majority of activity is currently concentrated in central government, while local government takes the second largest share of the market.

We expect to see continuing growth in public sector outsourcing activity as initiatives like Value for Money make outsourcing a more attractive proposition, while the Government’s G-Cloud initiative opens the market to a greater number of specialist service providers. The forward view

Looking ahead, we expect that the outsourcing market will continue to grow, as organisations slowly regain confidence post-recession. The challenge for buyers will be to understand how they can get the most value from their outsourcing efforts, and to understand the real business impact. We believe that this will start to gain momentum next year.

Article from: Consultant-News