Organisations are redesigning their businesses to access a global workforce in battle for talent and efficiency
The 2023 UK IT Sourcing Study, conducted by Whitelane Research in collaboration with PA Consulting, the company bringing ingenuity to life, investigates more than 750 unique IT sourcing relationships and 1,440 cloud sourcing relationships held by over 300 participants of the top IT spending organisations in the UK.
The findings reveal that as well as access to talent in an increasingly challenging labour market, cost reduction has moved up the rank as a joint top driver for organisations planning to outsource more, from third place last year.
By industry, the research found that public sector organisations were most affected by the need to access talent, with 83% citing this as a top driver for outsourcing. Financial services followed, with 62% citing access to talent as a key driver.
Key findings include:
- In the UK, 63% of organisations plan to outsource at the same rate or more in the next two years, of which 30% are planning to outsource more. Insourcing intentions remain stable compared with last year, with 18% of respondents planning to outsource less, driven by the need to build and retain their own Intellectual Property.
- Automation is the top IT investment area as organisations look to lower costs and reduce the need to hire (more) staff in a tight labour market (58%). This is followed by simplifying and consolidating the IT estate (52%),
indicating that organisations are keen to maximise the value from the investments they have made over last few years.
- Organisations are increasingly looking to implement a globally distributed delivery model. Both offshore and nearshore intentions continue to rise (33% and 27%, respectively), compared to 19% who intend to keep work onshore. Manufacturing sector offshore intentions are notably higher (54%), indicating a shift in the supply chain of talent, followed by financial services (40%), which has always been a leading sector in terms of utilising global delivery.
- Close to two-thirds of the UK market is satisfied with its IT sourcing provider, with 64% of all 753 IT sourcing relationships rated as satisfied or very satisfied.
This year, 27 IT service providers have been included in the general satisfaction ranking. Infosys and TCS are joint first for general satisfaction with 83%, followed by Hexaware, Coforge, Computacenter and HCLTech (all at 79%).
Satisfaction with cloud providers remains high, with 74% of all 1,440 cloud sourcing relationships evaluated as satisfied or very satisfied (10% higher than IT sourcing relationships). Amazon Web Services (AWS) remains top of the infrastructure cloud platforms ranking with 80%, while Microsoft Office 365 is number one again for software cloud platforms with 85%.
Manish Khandelwal, IT transformation expert at PA Consulting says: “Headwinds in the wider economy mean that the need for transformation has never been greater for a number of UK organisations. However, the war for talent continues to be intense, coupled with real and significant cost pressures. This is pushing organisations to rebalance their technology delivery organisation and operating model, optimise the use of outsourcing and insourcing, utilise talent at global locations, and maximise the value from the technology investments they have made over the last few years.
“The outsourcing industry continues to thrive, and the industry players that are innovative, proactive and can translate advancements in new technologies to deliver practical, tangible solutions at pace will have the opportunity to grow even stronger.”
The UK study is part of Whitelane’s annual IT sourcing studies and is one of the largest IT sourcing studies in the UK. We interview sourcing executives (CIOs/CFOs or their direct reports) about their outsourcing plans and their opinions on service providers. The studies are conducted across Europe and provide a comprehensive overview of the IT outsourcing landscape in each country. The survey shows the main IT sourcing trends, evaluates and ranks the leading IT and cloud providers based on key performance indicators and by segment, and analyses trends in outsourcing and governance.