Companies Expand IT Outsourcing Functions

Companies Expand IT Outsourcing Functions

Companies are expanding the range of services they outsource, with the development of apps at the top of list of businesses functions, according to research from consultancy KPMG.

Of the 30 international law firms surveyed by KPMG, 45% said their clients are showing an increase in demand for outsourcing services, while 7% reported a decline, down from 11%, 12 months ago.

Helpdesk support (50%), finance/accounting (26%) and HR (24%) were identified as the other main areas companies were seeking to outsource.

But the growth in demand for outsourced services was matched by the need for legal support, as contractual wrangling becomes increasingly complex, said KPMG.

Bill Thomas, partner in KPMG’s Shared Services and Outsourcing advisory team, said cloud services were changing the nature of outsourcing arrangements. “The outsourcing industry is going through another evolution, with new forms of technology and the transformation of operating models. With that comes new stresses on the contracting phase.

“Cloud is growing steadily and adoption is growing steadily. But the buy side are getting their heads around how to consider data privacy and remain compliant with security stands, so the conversation has gone more to, ‘will I do it now or will I do it soon?’”

Companies had taken to the cloud one function at a time, rather than the wholesale overhauling of current systems, he said: “It’s been components at a time, with more functional solutions now being cloud-based and being embedded in the operating model.

“Understanding is going up and we are now seeing adoption rates picking up.”

He said the outsourcing market is mature on both supply and buy side, but elements such as cloud computing are bringing complexity into arrangements because they are less mature.

“Even if a mature outsourcer on the buy side is buying from mature supplier because the parties are dealing with something that feels new, they are approaching agreements with more caution.”

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