In the media

More people are bringing their IT services in house

By Torgeir Kveim Sti


02 April 2023

Fewer people want to outsource their IT expertise. At the same time, Norwegian customers of IT service companies are most satisfied with global providers.

Read the article in Norwegian here.

There is an increasingly clear trend for Norwegian companies to plan to move more server capacity and IT services back in house. This is shown in the results of the annual report from PA Consulting, conducted in collaboration with Whitelane Research, which analysed over 2,000 Nordic IT contracts.

“This trend started a couple of years ago, and has continued this year. The pandemic and the war in Ukraine have reinforced it, while at the same time we are seeing a new trend of deglobalisation and the desire to procure services closer to home,” says Clint Sookermany, partner at PA Consulting.

Want better quality

Among the findings that stand out in this year's survey is that Norwegian companies will to a greater extent take more IT tasks back in house.

19 percent of Norwegian companies want to outsource less important IT services.

At the same time, the number who plan to outsource more has decreased from 25 per cent last year to 16 per cent this year.

The most significant reasons behind this include better quality and the ability to turn work around faster in response to the market's needs, according to Sookermany.

In addition, stability in IT teams was highlighted as an issue.

“It is a battle for capacity and talent, where the big companies have to go offshore and need huge teams in short timescales. The disadvantage of this is a high throughput of IT people,” says Sookermany.

“We see that more people are choosing nearshoring in neighbouring countries, but there too we are approaching a situation where there are no longer people available. Companies can gain by outsourcing their IT services, but wages are rising globally, and in terms of competition, you may just be moving the problem on.”

Access most important

The majority of respondents still plan to outsource as much as before, or more, with the main reasons being more scalability and access to IT expertise.

As many as 64 per cent state "access to expertise and talent" as the most important reason why they outsource, up 11 percentage points from last year.

This is largely a consequence of the availability of IT expertise in the Norwegian market, where demand for capacity is about to explode.

According to Sookermany, this challenge is global.

“There is limited talent available, and the demand for what employers can offer is not increasing. The result is that this is coming back to bite the companies as people just move between companies nationally. The question is when this point is going to be reached with nearshoring and offshoring as well,” he says.

Tata best again

The report also presents an overview of customer satisfaction with the various IT service providers.

Once again, Indian Tata Consultancy Services (TCS) tops the list, followed by American Cognizant and Accenture with over 80 percent. At the opposite end, TietoEvry, Capgemini and CGI take the bottom three places.

In response, the technology manager at TCS highlighted to Finansavisen some of the reasons why the company scores highly. These were that it has the capacity and opportunity to draw from a global talent pool, as well as long customer relationships and close follow-up.

TietoEvry comes out worst, with a customer satisfaction of 64 percent. According to Sookermany, the company has a way to go to reach the top tier. “TietoEvry is assessed on the most contracts, including several older contracts, which can reduce the average score. However, that does not excuse their poor ranking completely,” according to Sookermany.

“ TCS has almost the same number of contracts, and are good at following up with customers. TietoEvry has some work to do to match that.”

Best among cloud providers

The cloud providers are also ranked in the report, an industry which in Norway is dominated by Microsoft, Amazon Web Services (AWS), Google and IBM.

Here Microsoft clearly comes out the best, and is ranked highest with 84 percent customer satisfaction.

“It is a great help that everyone is used to Microsoft tools, and others have to find ways to counteract what Microsoft offers. That, together with the security the company could offer by establishing data centres early, we believe are the important factors,” says Sookermany.

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