Deloitte Survey: Disruptive Outsourcing Solutions Are Challenging Traditional Methods and Driving Competitive Advantage

Companies are increasingly prioritizing disruptive innovation from outsourced providers and rewarding them with additional compensation and services

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Deloitte

Sep 13, 2018, 09:00 ET

NEW YORK, Sept. 13, 2018 /PRNewswire/ -- Disruptive outsourcing – led by technologies such as cloud and automation – is transforming traditional outsourcing, which typically focused on cost reduction and performance improvement, according to the new "Deloitte 2018 global outsourcing survey" of more than 500 executives in 25 countries across six sectors.

"Advancing technologies offer more opportunities to be agile, to enter new markets, and to expand offerings, all of which can accelerate top-line growth," said Doug Plotkin, managing director, strategy and analytics, Deloitte Consulting LLP. "While cost optimization is still important for outsourcing, it is no longer at the top of the list – nor even in the top five. The value in robotic process automation and other technologies is clear, and companies are increasingly encouraging their service providers to adopt these and other solutions."

Eighty-four percent of companies polled have initiated discussions, conducted pilots, or implemented disruptive solutions – and organizations that have are reaping the benefits. Roughly half of the organizations polled move additional services to providers who pursue disruptive technologies. Forty-three percent make it a key requirement of the contract, and 37 percent increase provider compensation for innovating.

"Bold technology transformation requires access to cutting-edge talent and thinking, and executives still turn to outsourcing as an engine for change," said John Tweardy, principal and technology strategy and business transformation market offering leader, Deloitte Consulting LLP. "The difference today is the expectation of innovation and collaboration with strategic partners and alliances, creating a robust delivery eco-system."

While most organizations are enthusiastic about the implementation of cloud and robotic process automation (RPA) solutions, selecting a service provider with such capabilities is not without its challenges:

Data security is the top concern among respondents when implementing cloud (68 percent) and RPA technologies (62 percent).
Performance and resilience are also top concerns for adopting cloud (45 percent) and RPA (48 percent).
Approximately 4 in 10 respondents were concerned about service provider compliance.
Seventy-five percent of respondents indicated that cyber risks are affecting their outsourcing decisions.

Organizations are also increasingly using outsourcing during merger and acquisition transactions. Of the companies polled, 67 percent said they used outsourcing to enhance M&A efforts. This is a sharp increase from 45 percent in 2016 when the last survey was conducted. "Outsourcing can bring value to merger and acquisition transactions, and companies are beginning to recognize that value," said Jean White, principal and US global business services practice leader, Deloitte Consulting LLP. "Given the rate at which companies are relying on outsourcing in M&A efforts, many are looking to get a leg up on their competitors by finding value in unconventional ways."

In this year's survey, 521 executives were polled from leading organizations, eighty-five percent of which have more than $1 billion in annual revenue. Deloitte conducts the biennial global outsourcing survey to understand the state of the outsourcing market and to identify trends. The 2018 survey focused on understanding the effects of next-generation solutions such as cloud and RPA on the outsourcing landscape.

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SOURCE Deloitte