Competition for talent has reached unprecedented intensity. Outsourcing can help. The rules, however, are changing as third-party models evolve to enhance business and IT processes with AI and data insights. Explore the Global outsourcing survey to learn how forward-thinking organizations are finding ways to boost innovation and competitiveness.
Beyond outsourcing: Entering a new sourcing ecosystem
Selecting whether to deliver capabilities internally, with third parties, via global in-house centers, or through a combination of the three is not easy. Making a decision requires an ecosystem management view beyond traditional vendor management.
Our latest Global outsourcing survey report offers a glimpse at how the latest outsourcing strategies are reshaping the industry and affecting both providers and clients.
5 key findings from the 2022 global outsourcing survey
Finding and keeping the right talent with the right skills at the right price is more elusive than ever
The issue of talent acquisition and retention is more pronounced than ever in the digitally transforming world. Executives reported talent acquisition as the top internal challenge for their organizations, despite more than half reporting an increase in their staff over the last year to support the demand for growth. Simultaneously, 62% of executives say they are ill-prepared to address the causes and impacts of poor employee retention. This revolving door effect, coupled with new remote working options, causes organizations to seek and fight for talent in a global market. It also creates an opportunity for service providers to deliver solutions for outstanding talent problems.
50% of executives identify talent acquisition as a top internal challenge in meeting their organizations strategic priorities.
Third-party delivery models keep evolving to unlock value: Operate Services
Reported increases in revenue and budget across industries indicate strong growth in the use of third parties over the past two years. While enabling functions and IT departments continue to outsource most of their services through differentiated third-party delivery models, core business operations (e.g., product development, sales, etc.) remain internally managed. In addition to Traditional Outsourcing, Managed Services, and Operate Services, service providers now supply knowledge, capability, and capacity by providing on-demand access to hard-to-source talent and expertise on technology and transformation that keeps pace with the continuously evolving business environment. This shift towards Operate Services signals the desire to deliver core capabilities in collaboration with service providers, aiming for elevated business value creation.
67% of executives indicate a budget increase for Operative services.
57% of executives indiacte a budget increase for Managed Services.
32% of executives indiacte a budget increase for Traditional Outsourcing.
Cybersecurity and data analytics are the top outsourcing priorities
Executives identified cybersecurity as the number one external challenge they face in achieving their strategic objectives. Today, 81% of executives turn to third-party vendors to provide, in full or in part, their cybersecurity capabilities. Executives also indicated demand for extracting value through data via analytics. 96% of executives cited service providers as the source for the development of data and analytics capabilities. As executives focus on both harvesting and protecting their enterprise and ecosystem data, service providers must be willing both to offer talent-integrating solutions and to bear risk.
48% at least 3 out of 4 executives use thirdy-party vendors to support the cybersecurity function.
81% less than half of these orgainizations are prepared to handle this challenege.
Global in-house centers (GIC): internal sourcing with intention is an alternative to third parties
The ‘what’ and ‘how’ of sourcing strategy is not an easy decision to make as a plethora of options exist. In addition to third-party providers, organizations can retain and manage functions (or a portion of them) through global in-house centers (an evolution of captive operations), global shared services, or by acquiring in-house capabilities through Build-Operate-Transform-Transfer (BOTT) strategies. An effective sourcing model goes beyond cost and skillset and considers time zone, cultural similarities, and enhanced infrastructure. With comfort in remote work, organizations globally are looking to expand their external workforce to new regions such as Latin America for USA near-shore access, or Eastern Europe instead of India. GICs have regained attention as an attractive option for organizations looking to find cost-takeout and long-term innovation, resulting in the evolution of the GIC.
Evolving from vendor management to a holistic ecosystem management
Despite the evolution of the service delivery model, executives ranked collaboration with external providers at the bottom of their strategic priorities and culture fit at the bottom of their vendor selection concerns. As the complexity, number of third-party choices, and configuration options for service delivery models expand, now is the time to ensure that enterprises have a robust strategy and framework to manage an ecosystem of third-party relationships in full coordination with their internal workforce, GIC, and business-led tech strategies, compared to the traditional siloed vendor management approach. Managing the third-party ecosystem goes beyond SLAs: transparency and trust must be paramount.
22% of executives primary third-party selection concern includes the negative impacts to compnay culture.
The priorities and needs that lead organizations to outsource have changed since our last survey. Not only have technologies evolved, but ways of working also transformed and borders expanded.
Download the full report to explore detailed findings and analysis, insights from executives, and takeaways on how you can enhance your sourcing model to unlock immediate and long-term business value.
