The UK’s leading organisations report that their satisfaction with the performance of IT service providers has increased to record levels this year, as has their ability to manage their outsourcing contracts. These findings are from this year’s ‘Information Technology Outsourcing (ITO) Service Provider Performance and Satisfaction Study’ undertaken by business advisory firm EquaTerra.
UK ITO buyer organisations ranked Capgemini (79%), Cognizant (79%) and Computacenter (78%) as the top three service providers for client satisfaction scores in this year’s study and the bottom three were HP/EDS (59%), Verizon Business (58%) and CSC (51%). Of equal significance are findings showing clients’ satisfaction increasing for outsourcing on all performance indicators measured, including quality of service, price, innovation and flexibility.
Insight gained from service providers which achieved the best client satisfaction scores showed two key common traits. These being, a strong desire to deliver a very focused portfolio of services and, in particular, successfully developing an internal culture which empowers their staff to proactively engage with clients to develop innovative solutions.
The study has also revealed that European ITO service providers improved their satisfaction scores at greater levels than most Indian-based service providers. In the 2008 edition of the study, the top five rated service providers for customer satisfaction included four Indian and only one European provider. This year, four of the top five rated providers are European, while just one is Indian.
This year’s market study, the largest ever, analysed over 500 outsourcing contracts held by over 160 of the top IT spending organisations in the UK. The total annual value of the contracts included in this study is in excess of £10 billion and account for two-thirds of the total UK outsourcing market in terms of annual contract value. All commercial sectors are represented in the study, as is the public sector, including both central and local government organisations.
Lee Ayling, EquaTerra’s Managing Director, IT Advisory, UK commented, “Given the strong emphasis on cost cutting this year, the ability of service providers to deliver high quality, innovative and flexible services at a lower cost is a positive sign for the outsourcing market and its ongoing growth.”
Martyn Hart, Chairman of the National Outsourcing Association, added, “The shift identified in this study is symptomatic of the changing nature of outsourcing relationships. End users are now looking for IT partners that will advise, push back with ideas and innovate. As IT continues to become more central to businesses operation, those suppliers that can offer a higher-value service will see increasing success.”
Further trends clearly identified:
Significant improvement in customers’ abilities to manage service providers
End-user organisations continue to improve their outsourcing governance skills. This is particularly the case in the UK. The greatest area of weakness relative to outsourcing governance relates to buyers’ use of supporting software tools and solutions and their ability to easily access accurate and timely service provider cost and performance data.
Propensity to re-let findings
Interestingly, a high general satisfaction doesn’t always correlate with the strongest propensity to re-let with the incumbent service provider. Many buyers are undertaking or are considering service provider consolidation and rationalisation efforts often as a component of overall efforts to reduce spend. These efforts will invariably lead to some service providers losing business, even if they were performing at adequate levels.
Cost reduction and flexibility dominates at the expense of quality improvement
Creating cost savings remains the main driver for ITO, but enabling greater financial flexibility is gaining importance while the focus on improving the quality of services slipped in importance.
Global sourcing remains a dominant element in an organisation’s sourcing strategy
Rising protectionist trade sentiment and policies have not materially impacted global IT sourcing. Buyers in general are moving more towards a global sourcing model and away from just employing point-to-point offshore outsourcing.
The economic climate is still increasing the demand for outsourcing in the UKs
Economic conditions continue to provide UK buyers with the motivation to enact more radical and deeper IT outsourcing strategies. Tight IT budgets are driving additional outsourcing as buyers are forced to do more with less, especially if they hope to make any sort of major investments in new hardware or software in 2010. This increased demand for outsourcing is a trend EquaTerra expects to continue as organisations make preparations for improved economic conditions.
Source: http://www.consultant-news.com/Article_Display.aspx?p=adp&ID=6421
