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Mid-market companies are outsourcing more

Mid-sized companies are increasing their outsourcing at a faster rate than large enterprises and using a more diverse range of suppliers

Mid-sized companies are increasing their outsourcing at a faster rate than large enterprises, and using a more diverse range of suppliers in doing so.

Research of the Forbes G2000 from Information Services Group (ISG) revealed a 124% increase over the past five years in the number of business process and IT outsourcing contracts with a value of between $10m and $25m. This compared with a 72% increase in the number of contracts worth over $25m during the same period.

Deborah Card, partner at ISG, said this growth is coming from the smallest third of the G2000. “We are seeing growth from companies that have not outsourced [a lot] before.”

She said only between 25% and 30% of these companies outsourced before 2008.

There was growth across the board in IT outsourcing, said Card. 

“Mid-sized companies do not have the legacy systems that the big companies have so they can transfer to outsourcing easier. The reduction in capital expenditure is also attractive to smaller companies," she said.

The research also found that standardisation through cloud services is attracting mid-sized companies that do not want to have to complete major customisation. Infrastructure as a Service (IaaS), Software as a Service (SaaS) and Business Process as a Service (BPaaS) are outsourcing services with significant take-up.

Card warned that many companies new to outsourcing are making the same mistakes as the bigger companies did when they embarked on outsourcing strategies. These include not planning enough for change management and governance, as well as not having clear expectations of the supplier and service.

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