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Third of organisations to outsource more IT amid talent shortage

Cutting costs is not the main reason for outsourcing IT in the UK, according to a major study

A third of UK organisations (32%) are planning to outsource more of their IT over the next two years – and, for the first time, their biggest reason for doing so is not to cut costs.

According to major study, the main reasons for outsourcing were to enable organisations to focus on their core business and to access talent, marking the first instance of cost-cutting not being the top motivation.

The study of 270 of the UK’s biggest companies, carried out by Whitelane Research and PA Consulting, studied around 1,000 cloud and IT outsourcing relationships.

A total of 57% survey respondents said they are outsourcing to focus on their core business, while 56% said it is to gain access to skills and resources.

Out of those organisations surveyed, 50% are planning to outsource at their current rate over the next two years, and 18% are planning to outsource less.

Manish Khandelwal, IT transformation expert at PA Consulting, said the pandemic years have accelerated the pace of digital transformation across sectors.

“The outsourcing industry has used the pandemic years as an opportunity to transform its operating model and has emerged stronger. The war for talent has reached unprecedented levels and will only intensify in the short term, however the industry has the unique opportunity to drive global workforce transformation,” said Khandelwa.

“As the world economy enters a potentially turbulent period, winners will be those that are able to meaningfully co-create with clients, help them reduce time to market and contribute to both the top line and the bottom line.”

The study found that transition and change management is one of their weakest capabilities among respondent organisations, with 29% stating that that significant improvements are required. It found that in-house capability is the main challenge to deliver complex transitions for 62% of respondents.

The cloud is also an increasingly important destination for many IT operations at major organisations. According to the study, 52% predict that half or more of their application portfolio will be in the cloud in two years.

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