Cost reduction remains the motivation for IT outsourcing

20 July 2012

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22 July 2012 | Kamalpreet Badasha

Most clients are satisfied with their IT outsourcing provider, but almost a third believe they pay above the market rate.

A study by KPMG, which examined 630 contracts worth around £14 billion, found 56 per cent of clients described themselves as ‘satisfied’ or ‘very satisfied’ with their relationship. But some 13 per cent were not satisfied with their supplier. And 3 in 10 believe they are being charged more than the market rate

“Outsourcing looks set to remain a large part of IT spend in the UK, but suppliers should not take it for granted that clients will remain willing to put their hands in their pockets,” said Lee Ayling, partner in KPMG’s shared services and outsourcing advisory practice.

Some 74 per cent were satisfied with quality and IT security of their provider. But happiness levels fell to 55 per cent for innovation and 59 per cent for risk management.

The UK Service Provider and Performance Satisfaction Survey 2012 found cost reduction continues to be the primary motivation for outsourcing, for 70 per cent of participants, although this is a fall from 83 per cent the last time the survey was conducted in 2010. Access to skills, the second most popular, has risen from 39 per cent in 2010 to 51 per cent now.

“Spend has been fuelled by a need to respond tactically to the difficulties brought about by tough economic circumstances, but complacency is not an option,” added Ayling.

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