3Q11 KPMG Sourcing Advisory Global Pulse Survey
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More Organizations Using Complex Mix of Shared Services and Outsourcing to Meet Service Delivery Needs |
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Introduction
KPMG is pleased to release the findings from its KPMG 3Q11 Sourcing Advisory Pulse surveys. These Pulse surveys provide insights into trends and projections in end-user organizations’ usage of shared services, outsourcing, and third-party business and IT services. The learnings are gleaned from KPMG firms’ advisors, who work closely with end-user organizations that are actively exploring or undertaking shared services, outsourcing, offshore, and other service delivery initiatives, as well as from leading global business and IT service providers.
The advisor and servicer provider Pulse surveys were originally developed by EquaTerra, a leading sourcing advisory consultancy that KPMG* acquired in February of 2011. They are now part of a broader family of KPMG Pulse surveys that include similar surveys focused on specific geographies such as China, functional areas such as real estate and facilities management (REFM), related key topics such as cloud computing and HR transformation, and broader business market trending.
Since their inception in 2004, the advisor and service provider Pulse surveys have yielded insightful analyses of current and ongoing market trends in the use, deployment, and delivery of business and IT services. They capture changes in demand, usage levels, future adoption plans, and related key market indicators. They highlight the changes, and the direction of change, in the business and IT service markets as a whole. The surveys focus on where the market is going and how that direction is changing—or not—compared to prior quarters and years.
This edition of the advisor and service provider Pulse surveys reflects business and IT service market activity during 3Q11 as well as projections for the balance of 2011 and into 2012.
Topics explored include:
- Demand and adoption trends for shared services and third-party business and IT services
- Drivers for service delivery improvement efforts
- Trends and best practices in the use of shared services
- Buyer outsourcing transition challenges
- Outsourcing deal pricing, service provider profitability, and scope
The Pulse surveys focus on end-user organizations’ global use of shared services, outsourcing, and other third-party services across the following functional areas: customer care/call center, finance & accounting (F&A), human resources (HR), information technology (IT), knowledge process outsourcing (KPO), procurement/ source-to-pay, real estate and facilities management (REFM), and vertical industry business services. |
The following leading global business and IT service providers participated in the quarter’s survey:
- Accenture
- ACS, a Xerox company
- ADP
- Aon Hewitt
- Atos (formerly Atos Origin)
- BT Global Services
- Caliber Point
- Capgemini
- Ceridian
- Cognizant
- CSC
- Dell
- EXL Services
- Fujitsu
- Genpact
- HCL Technologies
- HP
- IBM
- Intelenet
- Logica
- Mercer
- Syntel
- T-Systems
- TCS
- Wipro
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Management Summary
A key focus of the global Sourcing Advisory Global Pulse surveys is identifying the means and methods through which buyer organizations improve service delivery performance levels and cost effectiveness. Results from the 3Q11 edition find that the top means buyers employ to do this is working to improve their service delivery governance and management processes and capabilities. Their focus is as much on improving existing efforts’ performance as embarking on new alternative service delivery model efforts.
Relative to service delivery models, the survey results find that there is more market interest and demand for IT outsourcing (ITO) than for horizontal business process outsourcing (BPO), though BPO growth in specialized, niche and vertical industry services is stronger. Interest in shared services as an alternative or complement to traditional outsourcing continues to grow, with the deployment and expansion of nearshore captive operations of particular interest to many buyers.
Leading organizations today employ a broad range of service delivery models and techniques that increasingly, and prominently, include shared services, near and offshore captive operations, ITO and BPO. KPMG firms have developed a model labeled the extended global enterprise (EGE), that provides a framework to analyze and assess the characteristics and performance levels of global shared services and outsourcing services delivery models.
This edition of the Pulse survey explores how organizations are driving their services maturity efforts. It is important that buyer organizations understand the maturity of their global services delivery capabilities, as well as determine how much maturity is really needed to support strategic organizational goals. The assessment and measurement of service delivery maturity should occur across a range of operating categories such as commercial orientation, delivery models employed, global process ownership, governance and organizational models, and degree of standardization. It is also important to balance the pursuit of greater maturity against the cost and complexity of doing so.
The Pulse takes a deeper dive into buyers’ shared services usage levels, success factors and key challenges. Interest and adoption levels for shared services have rebounded over the past one to two years. There are many drivers for this including organization and function specific requirements, pullback from disappointing outsourcing efforts, avoidance of pursuing overly aggressive outsourcing, and more conscious efforts to taking a portfolio model approach to service delivery. |
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The basic goals as well as challenges for shared services efforts are similar to those for outsourcing. A common challenge for outsourcing is conducting a successful transition. Buyers and their service providers too often struggle to get efforts off on the right foot, which can plague efforts throughout their duration. Focusing on this problem, the Pulse examines specific challenges buyers face in outsourcing transitions, and identifies potential solutions.
The Pulse finds that most service providers remain cautiously optimistic on near- to medium-term outsourcing demand, though there are signs of potential demand softness in early 2012. Economic uncertainty and the pursuit of outsourcing alternatives are the key gating factors for demand. Providers continue to face strong pricing pressure that challenges efforts to maintain or improve profitability but continues to spur efforts to develop more profitable service offerings. ITO, more specialized BPO and multi-tower deals are the service areas that continue to exhibit the strongest levels of demand.
Return to top for links to the full report and derivative materials >> |
Questions or comments regarding the advisor Pulse surveys should be directed to Stan Lepeak, Director of KPMG Sourcing Advisory Global Research, at slepeak@kpmg.com or +1 203-458-0677.
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