The Nordic outsourcing market remains healthy with satisfied clients and continued growth. 72 % of all respondents in the study confirm that they will continue to outsource at the same rate or more. However, results clearly confirms changes in the market with an increasing number of clients planning to insource (13 %) and cloud providers continue to climb in the ranking.
will continue to outsource
The 2019 Nordic IT Sourcing Study, conducted by Whitelane Research in collaboration with PA Consulting Group, investigated more than 1000 unique IT sourcing relationships held by 334 of the top IT spending organisations in the Nordic region. 35 IT service providers have been evaluated and ranked based on the opinion of their clients. The scope of this research makes it the most comprehensive client study covering IT outsourcing and IT service provider performance across the Nordic region.
"Whilst the Nordic outsourcing market remains healthy, it certainly continues to change. Less outsourcing is predicted combined with increase in insourcing driven by agile adoption. Local, regional and cloud providers are climbing in the rankings and the previous domination of Indian service providers is a thing of the past. While customer satisfaction remains high, use of robotics, artificial intelligence and Agile methods are rapidly changing a mature market where clients have more options than ever"
PA sourcing expert
Fewer Nordic clients are looking to increase their level of outsourcing. Only 31 % say they intend to outsource more, compared to 36 % last year.
Clients' main objective by outsourcing remains "focus on core business" (64 %), followed by "cost reduction" and "access to resources" (both 63 %). 47 % of clients rank "improvement in service quality" as one of three main objectives for outsourcing.
Whilst clients generally acheive the objectives set for outsourcing, clients who expect more innovation from their outsourcing partnerships continue to be disappointed. 81 % of clients who look for more innovation from outsourcing have not achieved, or only partially achieved, their innovation objectives.
The increase in insourcing is primarily driven by the shift towards more "agile ways of working" (70 %) and a desire to increase the speed and quality of delivery" (62 %).
The general satisfaction with Nordic service providers remains high, 55 % of the respondents are either satisfied or very satisfied and another 32 % are somewhat satisfied. Of the more than 1000 contracts assessed, only 1 % are very unsatisfied.
Cloud providers score particularly high in "service delivery quality", "proactivity", "transformation quality" and "innovation" and clearly continue to threaten the traditional service providers.
TCS and Amazon Web Services (AWS) share the first place in the Nordic ranking with the most satisfied clients across the Nordic countries followed by Basefarm and Salesforce.com who share the second place.
Clients are adopting more agile ways of working, they are investing in new technologies and they increase their usage of public cloud solutions. The traditional service providers must find ways to better support clients with these initiatives or find themselves irrelevant and soon replaced.
9 out of 10 Nordic organisations will soon use Agile as the preferred delivery model. The adoption of DevOps is also spreading in the Nordics across all sectors, with 80 % who are already using or planning to use DevOps as the preferred model. The need to work more in Agile/DevOps teams is also the number 1 driver for clients who intend to insource.
Significant investments continue in Robotics and Artificial Intelligence (AI). 89 % of Nordic organisations say that they will increase the use of such technologies. However, the benefits of Robotics and AI seem less evident to clients in 2019, with 61 % that see significant or very significant benefits compared to 74 % who responded the same in 2018.
Clients (65 %) and service providers (81 %) agree that the biggest barrier to overcome for a wider adoption of public cloud, is security and privacy issues. Integration with existing or legacy systems is also proving to be a major obstacle for further expanding the use of cloud solutions.