A study by KPMG of 630 contracts worth £14 billion suggests that whilst many clients are happy to recommend their IT service provider, a significant proportion remain unsatisfied or indifferent to the support they pay for.
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“Outsourcing looks set to remain a large part of IT spend in the UK,” says Lee Ayling, partner in KPMG’s Shared Services and Outsourcing advisory practice, “but suppliers should not take it for granted that clients will remain willing to put their hands in their pockets.”
The UK Service Provider Performance and Satisfaction Study goes on to show that, 76 percent claim they intend to continue outsourcing, but just 19 percent are ‘certain to outsource more’ but many want to see improved quality of service.
Asked why there was some discontent 45 percent said service providers are failing to actively identify opportunities for innovation. For others, their service providers ‘reluctance to shoulder some of the commercial risk’ is a major concern.
Worryingly, 3 in 10 also claim that some agreements are not met on time or to budget.
“Up to this point, continued spend has been fuelled by a need to respond tactically to the difficulties brought about by tough economic circumstances, but complacency is not an option.” says Ayling.
The disconnect between client apathy and their willingness to renew contracts has been driven by a combination of the rapid growth of Cloud and App-based technology, a need to access key skills and increased confidence when it comes to managing suppliers.
3 out of 10 say they pay more than ‘market price’ and cost saving as a driver for outsourcing has fallen 12 percent since the last study and replaced by desire for better skills.
Ayling concludes: “Just going for a low-cost option isn’t the de facto reason to outsource anymore. Companies are now looking at how outsourcing helps improve the quality of service they can offer to customers. At the same time a thirst for quality improvement means they want access to the skills that may be missing in house and the ability to respond rapidly to change.”