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Back-office service providers failing to deliver

Karl Flinders

Back-office service providers are failing to meet customer needs, with 70% of suppliers claiming projects are not being managed properly when transferring from an in-house to an outsourced function, says research from KPMG.

According to KPMG, 56% of suppliers blame this on inadequate resources.

Almost half (46%) of suppliers interviewed by KPMG admitted that projects are not completed on time and to budget, with 65% of these claiming a lack of understanding of the deal was to blame for the failings.

Despite these problems, the research revealed that confidence is up among back-office services suppliers.

According to KPMG, 59% of back-office support services providers think demand will increase over the next six months. This is 8% higher than the findings of a similar survey earlier this year.

A significant 65% of respondents believe IT will be the back-office function outsourced the most over the next six months. A massive 89% of suppliers interviewed think existing projects will see increases in scope. IT outsourcing is expected to be the back-office function which is outsourced the most over the next six months as the economic outlook improves.

Increased demand will come as good news for supplies. In the three months to the end of September 2012, only 38% of suppliers actually grew and 10% had a drop in demand.

But suppliers need to improve if they are to sustain demand, according to Shamus Rae, head of KPMG’s shared services and outsourcing advisory team. 

“With the past quarter showing weak signs of growth, the only way to inspire confidence is for suppliers to ensure they are constantly on top of their game," he said. "If they unable to meet demands, we are likely to see more conversations and fewer contracts as clients maintain a wait-and-see approach to the services they sign up for.”

A recent KPMG survey analysed 630 UK IT outsourcing contracts worth £14bn. It revealed a continued appetite to outsource, with 76% of organisations continuing to outsource IT at the same level or increase it. 

But only 19% said they will outsource more, compared with 25% in the study last year.


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