Shared services are top choice in growing outsourcing market


Shared services are top choice in growing outsourcing market

Karl Flinders

Businesses and public sector organisations continue to outsource operations, with demand for shared services outstripping traditional outsourcing.

According to KPMG research into outsourcing trends, over half (52%) of organisations in North America, Asia and Europe increased investment in shared services during the last quarter. This compares with 37% that have seen increased demand for traditional IT outsourcing, and 27% for business process outsourcing (BPO).

The research found that banking and healthcare were the sectors outsourcing the most, with IT, finance and accounting, and HR functions the main candidates.

While traditional outsourcing remains a valuable component of business efforts to reduce overheads, relative growth of its use has slowed, KPMG found. 

“The relatively weak BPO growth expectations are a reflection of diminished demand for more traditional, generic, transaction-oriented outsourcing arrangements, such as in finance and accounting, in contrast to the greater demand for more specialised BPO,” said Shamus Rae, partner at KPMG’s shared services and outsourcing advisory team.

The research also revealed that IT services suppliers are becoming more confident of demand. A significant 68% said they were cautiously optimistic about their pipelines growing over the next three months, compared with 61% in January.

Half the suppliers expect demand for IT services to increase in the next three months, with customers buying bundles of outsourcing such as business and IT.

Offshoring, nearshoring and cloud computing were also cited as areas of increased investment.

Half of service providers said their clients had one or more live cloud services deployments in business units. A total of 92% expect this to be the case for them in 12 months. 

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