Up to two-thirds of organisations plan to continue or increase IT outsourcing in the next two years.
Over the next two years, 33% of UK businesses are predicting they’ll outsource more, up 2% since last year. This stability could be due to organisations currently not looking to make any changes due to uncertainty caused by COVID-19.
Insourcing also remains stable, with 16% of organisations planning to outsource less compared to 15% last year. The main driver of insourcing is the need to build and retain ownership of Intellectual Property.
Overall, respondents are satisfied with their IT service providers, with 89% of all 628 IT sourcing relationships rated satisfactory.
The Manufacturing and Chemicals sector is predicting the largest increase in outsourcing, with 59% of organisations planning to outsource more, 26% above the average for the UK. This is in sharp contrast with the public sector, where only 21% plan to increase their level of outsourcing and almost 36% will outsource less.
Despite a decrease of 5% in importance since last year, cost reduction remains the main driver for organisations planning to outsource more in the UK (66%), but there are some variations across sectors. In Manufacturing & Chemicals, 60% say cost reduction is their main drive, while 50% of public sector respondents feel the same.
This could be because public sector clients believe focusing on cost is impacting service quality, reflected in their consistently lower satisfaction scores compared to the private sector. Yet overall, satisfaction is high, with 96% of all 878 cloud sourcing relationships rated satisfactory.
At the same time, use of cloud looks set to continue to grow in the UK as two-thirds (67%) of organisations predict that more than half of their new applications will be running on public cloud in two years’ time. Yet only 28% predict at least half of their legacy applications will be on cloud. This is due to organisations believing cloud migration won’t be straightforward or even possible, with potentially significant risks that might not be economically viable.
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