Half of all enterprises plan more outsourcing in 2013: State of Outsourcing 2013 Survey

Five-out-of-ten major enterprises intend to increase the volume of application development and maintenance outsourcing during 2013, with four-out-of-ten intending to increase Finance and Accounting outsourcing, according to new research from U.S. audit, tax and advisory firm KPMG LLP and HfS Research, a leading analyst authority on global business operations strategies.

The survey, "State of the Outsourcing Industry 2013," which covers the viewpoints, dynamics and intentions of 1355 senior leaders from major global enterprises, outsourcing services providers, management consultant firms, sourcing advisory firms and other key industry influencers, found that client expectations of outsourcing are evolving to be more value focused, with IT, Finance and Accounting administrative processes dominating future outsourcing plans. Achieving operational effectiveness when they outsource, specifically for cost reduction, greater scalability of operations and process standardization, continues to be the primary motivation behind IT and business operations outsourcing for more than three-quarters of survey respondents.
Cliff Justice, lead partner for KPMG’s Shared Services and Advisory group said, "It’s abundantly clear that the vast majority of enterprises are looking to expand strategic outsourcing relationships in the medium-term as economic conditions improve. While many held back from radical transformation strategies during the recession, we’re now seeing real action from many enterprise operations leaders who are ratcheting up their sourcing plans – especially with their administrative business processes."
Additional findings from the survey include:

• Core areas of strategic focus when outsourcing include accessing better talent (70%), gaining access to better technology (62%) and improving analytical capabilities (62%).
• Mid-market enterprises ($1bn-$5bn revenues) are much more motivated by strategic needs than high-end enterprises (more than $5bn revenues).
• Outsourcing customers are satisfied with cost-reduction and standard delivery from service providers (88% are satisfied), but indicate service providers are falling short in strategic areas, such as improving analytical capabilities, access to talent and achieving innovation.
• BPO engagements are notably outperforming IT Outsourcing engagements for cost reduction, effectiveness, and process standardization, process transformation and improving analytical capabilities.
• Outsourcing adoption is still very nascent for business processes, with only 23% using outsourcing as the predominant model for accounts payable processes, 19% purchasing and accounts receivables, and 11% for recruiting and staffing.
• Close to a third of high-end enterprises view Global Business Services as a mission-critical framework for their future operating model.

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