Outsourcing market report

The business case for outsourcing services and processes to specialist third-party providers is well understood and the market is now relatively mature, according to industry experts.

There are now a wide spectrum of companies offering services including Capgemini, Capita, Accenture, EDS, IBM and Logica noted Clive Longbottom, service director at Quocirca

He says: “It is now pretty much a given that companies are not asking whether they should be looking to outsourcing, but rather what they should be outsourcing and when. More and more organisations have come to realise that technology is not a core competency and so look at tasks can and should be outsourced.”

Tony Morgan, IBM’s chief innovation officer for outsourcing told CIO that IBM in the UK is experiencing strong demand from enterprise clients across the full range of outsourcing services including IT infrastructure outsourcing (ITO), application and business processing outsourcing (BPO) services.

“This includes demand from clients with an established track record in using outsourcing as part of their business model and clients who perhaps in the past have only made very targeted use of outsourced services,” he said.

Andrew de Cleyn, MD Outsourcing Logica UK, added that established business-led outsourcing initiatives- including BPO, ITO SaaS and bureau services – are being augmented by new outsourcing models, which centre on medium-size companies looking to move more than just back office processes to third-party suppliers.

Unsurprisingly cost reduction remains the most commonly cited reason for firms to outsource services.

According to IBM’s Morgan: “Cost is obviously extremely important — both in terms of absolute cost but also in terms of moving from a largely fixed cost model to a variable cost one, giving the capability to ramp up and down over time in line with business demand, including the ability to rapidly grow following merger and acquisition activity.”

In terms of vertical sectors where outsourcing is being most enthusiastically embraced, Logica’s de Cleyn notes that in the UK public sector adoption is a growth area as government strategies such as the move towards shared services are creating more opportunities.

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