The 2019 UK IT Sourcing Study, conducted by Whitelane Research in collaboration with PA Consulting, the innovation and transformation consultancy, investigates more than 760 unique IT sourcing relationships held by over 240 of the top IT spending organisations across all industry sectors in the United Kingdom.
Key findings from the 2019 UK study include:
- Over the next two years outsourcing will continue to increase in the United Kingdom with 71% of organisations planning to outsource at the same rate or more, with the percentage of organisations planning to outsource more increasing by five percentage points in comparison with last year. For the first time since 2015 the number of clients planning to outsource less (insource) has decreased dropping from 22% to 16%.
- Clients indicate the main rationale for insourcing is driven by "the need to retain and own their own intellectual property" (75%) together with a shift towards more "agile ways of working" (75%).
- The adoption of agile has become mainstream, however ability to implement and sustain remains patchy, particularly in traditional organisations. Challenger organisations increasingly using agile to improve speed to market.
- Entry barriers are reducing for digital age service providers. Organisations are increasingly open to work with smaller players, particularly those offering niche products and solutions.
- Cost reduction is the most important outsourcing driver for the fourth consecutive year, followed by focus on core business and access to resources. Service providers place even more importance on cost reduction and almost twice as much importance on business transformation as reasons for why their clients outsource their IT services.
- An increasing number of organisations are finding ways to decrease the run budgets to invest in change.
- Despite a decrease of 4 percentage points since last year, the service provider community continues to show a strong overall satisfaction level with 84% of the clients being somewhat to very satisfied of the 766 evaluated IT sourcing relationships.
- Hexaware and Amazon Web Services (AWS) are the joint highest-ranking providers with a general satisfaction score of 78%, followed by NIIT (76%) and TCS (75%).
Across the four different IT domains, the highest-ranking providers are:
- For application development, maintenance, testing and SaaS: Hexaware, NIIT and TCS
- For data centre managed infrastructure and hosting: TCS, Amazon Web Services (AWS) and Capgemini
- For network & telecommunications: Orange, Vodafone and BT
- For end-user services and collaboration solutions: TCS, HCL and Microsoft
Manish Khandelwal, IT Transformation expert at PA Consulting, says: “Technology driven challenger organisations are transforming the way services are delivered and consumed across sectors. Technology investments are growing, presenting significant opportunities for established service providers and new entrants with differentiated offerings. Service providers that are able to transition from traditional delivery and commercial models without compromising the service quality are looking at an exciting future ahead.”
The UK study is part of Whitelane’s annual IT sourcing studies. We interview sourcing executives (CIOs/CFOs or their direct reports) about their outsourcing plans and their opinions on service providers. The study is conducted in 13 different European countries and provides a comprehensive overview of the IT outsourcing landscape in each country. The survey shows the main outsourcing trends, evaluates and ranks the main IT service providers based on a set of key performance indicators (KPIs), and analyses trends in outsourcing governance and the impact of new technologies.