2018 global outsourcing survey
Disruptive outsourcing trends, technology, and innovation
Disruptive outsourcing leaps to the front. Our 2018 outsourcing survey of more than 500 executives from leading organizations indicates that disruptive outsourcing solutions - led by cloud and automation - are fundamentally transforming traditional outsourcing.
Disruptive outsourcing: The new normal
Outsourcing-led transformations can address both business and IT challenges. The state of the art is advanced disruptive outsourcing solutions, incorporating emerging technologies to drive innova-tion, speed to market, enhanced user experience, and improved performance.
Disruptive outsourcing solutions have the potential to be as extraordinary a change in the sourcing world as was the Bloomberg terminal to the trading desk. Cost reduction is generally expected, though many organizations expect to invest some of those savings, increasing budgets within a particular function, to more broadly advance the business, particularly when doing so can eradicate costs elsewhere in the enterprise.
Most survey respondents have accepted that they should change their outsourcing strategy. They are now thinking about how to change solutions, which partners can elevate them, how to construct an incentives regime that motivates them to continually innovate, and how to implement and man-age this new outsourcing paradigm.
Three key trends emerged from 2018’s outsourcing survey
Outsourcing is enabling competitive advantage
While cost optimization is still a critically important criterion for outsourcing, it is no longer at the top of the list (nor even in the top five), since disruptive outsourcing, when executed well, can de-liver competitive advantage by transforming the way organizations operate, and making them more agile, efficient, and effective. The advantages are obvious to respondents: approximately 84 percent of them have either initiated discussions, conducted pilots, or have implemented at least some disruptive solutions.
Organizations are embracing disruptive outsourcing technologies such as cloud and robotic process automation (RPA)
The vast majority of organizations - 93 percent - are considering or adopting cloud solutions and 72 percent are considering or adopting RPA solutions. Seventy percent of respondents believe their service providers have a reasonable or advanced ability to implement disruptive solutions.
There are real challenges with adopting disruptive solutions
Data migration, security requirements, and application optimization/change are just a few exam-ples of challenges related to cloud adoption. Organizational resistance, highly fragmented pro-cesses, and regulatory restraints are common challenges related to RPA adoption.
As with many initiatives, organizations are finding that delivering competitive advantage through disruptive outsourcing solutions is anything but simple, effort and expertise are needed to address potential data security and cyber risks, changing regulations, organizational resistance, skill gaps, and to help flatten fragmented processes. In this new world, place your bets on the brave and the good, and against the fearful and complacent.
— Doug Plotkin, managing director, Deloitte Consulting LLP
We asked respondents what they would do differently when launching their next outsourcing initiative based on their past experiences.
- Service provider selection. The top responses were related to the selection process: spend more time in RFP or service provider selection (42 percent), and use a competitive bidding process (39 percent). This may be due to the increasing maturity of both the procurement and vendor management functions within organizations. Many clients use a sole source approach to service provider selection, likely with the expectation that it is faster to exe-cute the process with a single service provider, however, they will likely pay the price through higher fees, lower service levels,
and less favorable terms. And, counterintuitively, it will usually take longer, since a com-petitive process creates more sense of urgency than a sole source approach does (though, of course, a poor deal
can always be done quite quickly).
- Strategic planning approach. Other popular answers involved taking a more strategic approach and planning a new outsourcing initiative: increase the scope of service (34 per-cent), transform the process rather than simply lifting and shifting (30 percent), invest in more robust service integration and transition (28 percent), use a third-party advisor (27 percent).
This suggests that organizations have come to recognize the value that transformation, improved processes, experienced counsel, and transition play on the success of their outsourcing programs.
Download the executive summary of the 2018 global outsourcing survey to learn more.
If you have any questions, please reach out to Shakti Singh or Christopher Hodges.