UK IT sourcing study 2022
Outsourcing market continues to grow as war for talent intensifies
The outsourcing market continues to grow: Over the next two years, 32% of UK businesses are predicting they’ll outsource more, down only slightly on last year. For the first time in the UK, cost reduction is no longer the number one driver for outsourcing, with the need to focus on core business the primary driver, followed closely by access to resources and talent.
Organisations planning to insource have increased slightly this year to 18%. Similar to last year, this is predominantly driven by the need to build and retain own Intellectual Property to drive business. Compared to the rest of Europe, the UK has one of the highest percentages of organisations planning to insource.
When it comes to cloud services, more than 50% of respondents predict
that over half of their application portfolio will be in the cloud
within the next two years, driving further need for IT support.
About the survey
Now in its tenth year, the 2022 UK IT Sourcing Study, conducted by Whitelane Research in collaboration with PA Consulting, investigates more than 660 unique IT sourcing relationships and more than 575 cloud sourcing relationships held by over 270 participants of the top IT spending organisations in the United Kingdom, making it one of the most representative IT outsourcing studies in the market. These participants provided feedback on 26 of the largest IT service providers.
The report uncovers insights into the UK IT sourcing market, highlighting future trends and opportunities for clients and providers in this space.
Future trends within the sourcing industry
Future developments in sourcing partnerships
Cloud adoption continues and is driven by the need to improve agility and scalability
More than half of respondents predict that 50% or more of their application portfolio will be in the cloud in the next two years. Most organisations (86%) are planning to move to the public cloud to achieve more agility and scalability, while 54% cite improving continuity and stability. Cost benefits also are cited as an incentive to move to the cloud by 53% of respondents.
Focus on transformation requires specific skillsets
Clients continue to drive digital transformation with pace. This requires continuously evolving competencies and talent that organisations are struggling to attract and retain, resulting in an increase to their dependency on the IT provider community and driving further outsourcing.
Clients need to invest in capabilities
Both clients and providers agree that clients need to invest to improve internal capabilities to get the most out of relationships. Transition, change management and cloud integration are the main areas of concern for both clients and providers
As organisations drive the IT transformation forward, they need to:
Reassess the balance in the IT supply chain between insourcing and outsourcing
Take a pragmatic long-term view of the relationship with key suppliers
Bolster internal skills in business critical areas
Build attractive employee value propositions and career journeys to attract and retain the best talent
Design and transition to new operating models that support value stream delivery
Adopt cloud for new applications to minimise integration complexities and leverage the expertise of the cloud providers
Ensure contracts with suppliers recognise and facilitate new ways of working, such as Agile and DevOps, and actively work to integrate approaches
- Leverage hybrid working to access global talent through a combination of on, near- and off-shoring