This article is part of our Essential Guide: A CIO guide to the service cloud

UK businesses' IT services better off in India than the cloud

UK businesses have yet to be convinced of the benefits of cloud computing but continue to outsource IT, says a global survey from KPMG

UK businesses have yet to be convinced of the benefits of cloud computing, we continue to outsource the IT, according to a major global survey by KPMG.

The annual Service provider and performance satisfaction study from KPMG looked at 2,100 global contracts worth £7.8bn, including 313 the UK.

According to the study, 71% of UK businesses only spend 10% – or even less – of their IT budget on cloud services. Most are still outsourcing the traditional way, with India the favourite destination for IT services, according to 51% of UK companies. Poland was the next favourite with South Africa, both preferred by 8%.

Issues related to data location, security and privacy risks is the main cloud concern for 26% of the respondents; concerns over regulation and compliance for 16%; and 15% have concerns over how easy it is for cloud services to integrate with legacy IT systems.

Jason Sahota, director in KPMG’s shared services and outsourcing advisory team, said adoption remains relatively sluggish. But he said fears might be misplaced. 

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Balancing risk and innovation

“While concern about the security risks surrounding new technology is understandable it may also be disproportionate, as cloud options are just as safe as other outsourcing solutions," said Sahota.  

"Of course, investors and stakeholders will welcome caution on the part of the buyers, but they also want to see innovation, meaning that UK businesses will need to find the right balance to remain competitive.”

Outsourcing in general looks to grow at a lower rate in 2015 than in 2014. The survey revealed that 43% of businesses plan to increase spending on IT services, compared to 77% in the same survey the year before.

The survey also revealed a move away from outsourcing simply seen as a way to cut costs. One fifth of respondents (20%) said quality improvement is the reason to outsourced; 16% said it is to access skills; and 6% want to get things to market quicker through outsourcing.

Companies fear cloud data theft

According to separate research from the Federation of Small Businesses (FSB), data theft or loss is the biggest concern for companies that have not yet taken up cloud computing services.

Their concerns were: Data theft or loss (61%), reliable access to online services (55%), concerns over who would have access to the data (53%), liability issues (41%), and over-dependence on cloud services (33%).

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