About seven out of 10 enterprises plan to invest more in outsourcing services, and six out of 10 will expand the use of shared services over the next two years, according to a new report from advisory firm KPMG and outsourcing industry analyst HfS Research.
The report authors surveyed hundreds of representatives of major enterprises and organizations in the market for outsourced services for its report, “The State of Services & Outsourcing in 2014: Things Will Never be the Same.” The study found a significant increase in offshore outsourcing activity, both by service providers and among internal shared service centers, where organizations appear to be shifting more of their high-value work.
The analysts also found that clients are losing patience with service providers that don’t deliver added value beyond the terms of their original contracts.
“Outsourcing is at a crucial juncture between providing genuine value and low-cost staff augmentation,” said Dave Brown, KPMG LLP’s Global Lead, Shared Services and Outsourcing Advisory. “Providers need to prove they can do more than basic operations, otherwise outsourcing runs the risk of becoming a staff augmentation model for flexing operations as opposed to a strategic partnership between provider and buyer that can add more skill, technology, and analytical capability for clients.”
The study revealed enterprises, on average, are planning to boost offshoring activities by 20 to 30 percent in 2015. Other findings include:
- Sixty percent of enterprises say operational analytics are “extremely important” as an outsourcing outcome. A majority of organizations expect their service providers to step up with outstanding talent and technology improvements within two years.
- Enterprises are recognizing the benefits of cloud-based business process as a service (BPaaS) models, and are embracing them as a viable alternative to traditional outsourcing.
- Enterprises are interested in advisory services–as well as data and research–to improve the governance of outsourcing engagements.
The full report is available at this link.
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