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Results from the 2017 Nordic IT Outsourcing study

High outsourcing satisfaction and continued growth expected

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The Nordic outsourcing market shows overall healthy signs with high satisfaction and continued growth. 77% of all respondents in the study confirm that they will continue to outsource at the same rate or more, with 44% citing that they are planning to outsource more. Overall, respondents are satisfied with their IT service provider(s), with 91% of all outsourcing contracts being rated as very satisfied, satisfied or somewhat satisfied. 8 % are either somewhat unsatisfied or unsatisfied and only 1% indicates they are very unsatisfied.

About the survey

The 2017 Nordic IT Outsourcing Study, conducted by Whitelane Research in collaboration with PA Consulting Group, investigated close to 1,000 unique IT outsourcing contracts held by over 300 of the top IT spending organisations in the Nordic region. The scope of this research makes it the most comprehensive client study covering IT outsourcing and IT service provider performance across the Nordic region.

The survey confirms the Nordic market as diverse market and contrary to previous years the different archetypes of service providers are now scattered across the ranking. The Indian heritage providers can now be found from top to bottom, as can the local, European and American providers. All service providers try to improve the things that their competitors do well with a more homogeneous market as a result, where the gap between the service providers is becoming smaller and smaller.

Henrik Ringgaard Pedersen,
PA sourcing expert

The Indian dominance among Nordic outsourcing providers is broken

Companies will continue to outsource more. 44 percent of all respondents in the study confirm that they will continue to outsource more alltough the uncertainty of what to do is increasing.

"Focus on core business" is now the primary reason for outsourcing cited by 60 percent.

Cost reduction has dropped from 67 percent to 53 percent. Mainly because Norway is back to a more normal level (cited by 56 percent).

Access to resources has dropped from 62 percent to 53 percent. However, it is still remains an important driver for companies planning to outsource more based on a need for scalability, flexibility and lack of talents.

The overall satisfaction is as high as 91 percent of all clients being very satisfied, satisfied or somewhat satisfied.

TCS continues to be ranked as overall number 1, but this year this is true for all four Nordic countries.

No local service providers are in top 6 this year, but an interesting finding is that the Indian heritage providers are now spread out across the ranking from top to bottom, as with the American, European and local service providers.

Future trends

Innovation is becoming a key driver for outsourcing. Whilst many clients and service providers have struggled to leverage service providers to support innovation in the past, it is now becoming a key driver for clients requiring fresh perspectives and approaches from both sides to succeed.

The gap between service providers understanding of why clients outsource must be bridged. The majority of service providers believe clients outsource for business transformation which in reality is the fifth most important driver to customers. Furthermore, an important driver for clients are improvement of service quality which service providers believe is the least important driver.

The Software-as-a-Service (SaaS) providers have established themselves as true alternatives to traditional outsourcing within key areas, and as a result clients have now included them in their operational IT delivered to the business. The SaaS providers enter the ranking and their footprint is expected to grow significantly in the future along with other Cloud-services, however some clients struggle to integrate them into their service portfolio and efforts within this space will be key the coming years.

New ways of delivering IT services will be a key differentiator moving forward. Ways of working like Agile, Bi-modular and DevOps have been widely adopted and technologies within Automation, Robotics and Artificial Intelligence is the next big shift, but not all clients have understood nor realised the full potentials of these maturing technologies. The adoption, combination and integration of these ways of working and technologies should be the focus moving forward.

What do the most satisfied outsourcing clients in the Nordics do to succeed with outsourcing?

  • Creates a climate for cooperation and trust
  • Benefit from the service provider innovation
  • Dare to expose the vendor to the business representatives
  • Understand that service providers need to make a profit
  • Ensure ongoing healthy competitiveness between its key service providers
  • Maintains a long term view on the sourcing relationship
  • Balanced contracts with proper change management and active governance
  • Collaborates with the service provider for reduced attrition of contract resources and long term development
  • Visits service provider delivery sites and meet the delivery team frequently

In the media

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Financial Services - DK