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Analysis

2020 global outsourcing survey

Outsourcing trends and strategies shaping the future

The outsourcing trend of embracing disruptive technologies remains. However, the fallout from COVID-19 is signaling a return to basics: shoring up value and driving down costs, with a renewed focus on risk management. Our latest global outsourcing survey report offers a glimpse into how the latest outsourcing strategies are reshaping the industry and affecting both providers and clients.

About the survey

For more than a decade, our biennial survey has been the cornerstone of our outsourcing market research. This year, we took a more intimate approach. Instead of releasing a broad online survey to generate outsourcing statistics, we interviewed 40 client executives, service providers, and lawyers to bring a more qualitative perspective to our findings. Respondents are spread across the globe, giving us a more complete view of the outsourcing ecosystem. The interviews were conducted before and after the start of the COVID-19 pandemic, enabling us to identify how industry leaders have responded and where they plan to go.

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2020 global outsourcing survey report

Four key outsourcing trends

Cost reduction is back on top. In the past, many players in the industry stated that cost reduction is an ancillary benefit to objectives like increasing agility or improving the quality of service. This year’s survey shows a sharp increase in the number of organizations giving priority to cost reduction, and in the face of a pandemic-induced global recession, this outsourcing trend will only gain traction.

Cloud and robotic process automation (RPA) are table stakes. It’s no surprise to see cloud and RPA solutions becoming a core component of most new outsourcing strategies and transactions. In fact, as they become more proven and familiar, they’re less of a transformative driver than two years ago and are now effectively table stakes for all transformations. Organizations are looking forward to the next major technology catalyst to power the evolution of their business.

Supplier management is underpowered. Third-party ecosystems are more complex than ever, which has implications for regulatory compliance, security, risk, and data protection requirements. Organizations have rising expectations that service providers will spearhead their innovation agenda. COVID-19 put a severe strain on organizations’ supply chains. All these changing dynamics have made supplier management more critical than ever. However, this function is still underpowered in most organizations. Clients need to invest more in building their supplier management capabilities to manage the new normal and achieve maximum value from their service provider ecosystem.

Agility is critical. Changing business scenarios, heightened visa restrictions, and increasing customer expectations are all creating an imperative for service providers to become more agile. Firms will now accelerate overall outsourcing as they learn to collaborate in a world where speed, quality, flexibility, and cost are more important than geography. To stay ahead, service providers will need to rethink how they provide effective remote services, build plug-and-play solutions that enable rapid integration, and have contracts that allow them to pivot as the business priorities evolve.

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Additional key outsourcing insights

Lessons learned from the latest outsourcing trends

Preparing for the postpandemic world

From our own insights and interviews, we anticipate the following three changes will take shape across the outsourcing industry:

  • Business continuity planning will evolve rapidly (and already is) to cover future global pandemic scenarios and will include testing of service providers’ ability to deliver from home offices, maintain their own supply chains, and deliver both desired data security and work productivity.
  • Organizations that have migrated their functions and processes to the cloud will be in a better position to scale their technology resources with the changing demand. This will help them not only pay for what they need, but also provide technology resources required to meet that demand. They will also be in a better position to adjust their technology footprint once the pandemic has subsided.
  • COVID-19 has banished the idea that physical colocation of resources is necessary to develop a trusting relationship in the workplace. This will likely lead to an increase in outsourcing. A remote work culture is gradually being ingrained within companies, and this will help them access global talent from the most cost-effective locations. It would also allow companies to hedge their risks by diversifying their delivery locations.

Outsourcing remains an essential tool for client organizations to support their strategic goals. Requirements constantly evolve, and the industry continues to build support with both established and new solutions. As always, for both parties to benefit in an outsourcing relationship, it requires a client’s preparedness to invest and a service provider’s willingness to embrace flexibility. Overall, outsourcing decisions will play a significantly more strategic role in short-term resilience and long-term growth.

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2020 Global Outsourcing Survey report

Download the full report

Access previous editions of Deloitte's global outsourcing survey

2018 global outsourcing survey: executive summary

2016 global outsourcing survey: executive summary

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