will outsource more
The 2021 Nordic IT Sourcing Study, conducted by Whitelane Research in collaboration with PA Consulting, investigated more than 700 unique IT sourcing relationships and 700 cloud relationships held by more than 350 of the top IT spending organisations in the Nordic region. The survey evaluated and ranked 28 IT and/or cloud service providers based on the opinion of their clients. The scope of this research makes it the most comprehensive client study covering the performance of IT outsourcing and IT service providers across the Nordic region.
In the midst of the COVID-19 pandemic, the Nordic outsourcing market is surprisingly resilient and is characterised by continued growth and increasing customer satisfaction.
Both service providers and clients have adapted well to remote working during COVID-19. Around one in six (17%) of the respondents have experienced improved quality of service delivery, while 72% said there was no change in service delivery. Only 11% of clients experienced a decline in service delivery quality due to COVID-19.
Clients' main drivers for outsourcing are the need for "more scalability to business needs" (63%), "access to resources/talent" (53%) and "cost reduction" (53%). Compared to 2020, "access to resources/talent" increased the most (up 18 percentage points), indicating clients are ramping up their digital initiatives.
Across the Nordics, insourcing has fallen by five percentage points. The drivers for insourcing remain unchanged from 2020 - respondents want to achieve "faster time to market and/or improved quality outcomes" (79%) and overcome "the challenge of working with providers in Agile/DevOps teams" (61%).
Respondents across the Nordics are increasingly satisfied with their IT service providers, with 89% saying they're satisfied, 7% somewhat unsatisfied, 3% unsatisfied and only 1% very unsatisfied.
43% of Nordic organisations have outsourced cyber security. Respondents are highly satisfied with their managed cyber security service providers, with 85% stating they’re either somewhat satisfied, satisfied or very satisfied.
Six of the ten highest rated service providers are Asia-based, signifying that offshore delivery is strengthening its position in the Nordic market during the COVID-19 pandemic – a testimony to the maturity of the Nordic market and clients' ability to work virtually.
Clients are continuing their adoption of new technologies and ways of working. Observant service providers will make sure they help drive the implementation of new technologies while ensuring the client's organisational governance and internal alignment follows to drive long term success.
More than half of organisations in Norway predict they'll run more than 70% of their new applications on a public cloud platform in two years. While this figure is significantly lower in Denmark (34%), Sweden (34%) and Finland (37%), public cloud adoption continues to rise in the Nordics. Yet 91% of respondents said they need to improve their cloud management and integration governance capabilities, indicating adoption has proven tougher than many expected.
More organisations are looking to invest in intelligent automation, with 44% planning to increase their use and 30% saying they aren't using intelligent automation today but are planning to start using it in the future. This shows that clients have started to work with more advanced automation.
Only 27% of respondents said they have a close internal alignment between IT outsourcing and Business Process Outsourcing decisions. With only 6% of respondents saying they consider these as one service delivery decision, there's plenty of opportunity to develop this valuable alignment and create more efficient service delivery set-ups.