Outsourcing in Europe 2013

Factors governing outsourcing in Europe 2013

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In the face of growing outsourcing and global business service challenges, we present our first in-depth research on the outsourcing market.

Our survey results provide an in-depth analysis of the key drivers, risks and trends governing outsourcing across eight countries in Europe in 2013. The focus areas include:

  • Current outsourcing market
  • Trends and developments in the market
  • Key drivers and risks
  • Outsourcing transition and transformation
  • Contract elements within Europe

Key components of the survey

This research is based on in-depth interviews with executives from both client organizations and service providers and a survey of 3,700 outsourcing professionals, representing every major industry across the following eight European countries.

Outsourcing of services per country

EY chart – outsourcing of services per country

Factors governing the outsourcing market in Europe

Benefits: The survey reveals the top three reasons for outsourcing:

  • Cost reduction
  • Efficiency
  • Quality improvements

Most favored outsourcing processes: IT and business processes have emerged as the most favored for outsourcing. While IT services such as application development and IT helpdesk services are outsourced to some extent, marketing, HR services, sales and procurement are outsourced only on a very limited scale.

Maturity: Companies with a long history of outsourcing tend to have longer records of positive outsourcing experience. This maturity deepens trust in outsourcing and, in turn, encourages more firms in these countries to outsource.

Approximately 75% of IT services remain in-house, indicating that IT outsourcing demonstrates a large potential for growth in the coming years.

Outsourcing procurement: Services such as sales and procurement remain among the least outsourced, but companies can look at the bigger picture. Companies can benefit from invoice handling, centralizing processes and better spend visibility.

Change management framework: To realize the full benefits of outsourcing, a comprehensive communication and change management program is critical.

Embedding culture: Picking up knowledge of the client’s business is the biggest single challenge for an offshore provider. This can be addressed by knowledge transfer sessions in regular intervals. By working side by side, staff can deepen their understanding and exchange cultural knowledge.

Decentralized outsourcing: Lack of centralization may be one reason companies choose not to outsource. In addition, onshoring avoids cultural or language barriers and also potential risks from data privacy issues.

Insourced services: In certain sectors, companies bring services back in-house as they seek to carve out a competitive advantage.

Value addition from new drivers: Clients expect providers to act as business partners, who get to know their business and help to drive efficiency and development.

Cost-cutting: In certain industries, to keep costs down, companies stick to collaboration or use pooled services for development.

Improved benchmarking: During contract renewal, many clients go through a selection process to see if there is a better provider. It is important to benchmark quality and value against alternative providers to drive a harder renegotiation.

Download our full report for more insights and the individual country profiles.