Synergies of Machine Consciousness
Image courtesy of Getty Images

Offshoring Falls, Outsourcing Grows, and Automation Threatens to Swallow It All

Recent research shows that the operating model for businesses needs to adapt more quickly than ever to the pace of the modern economy. Global Business Services (GBS) needs to support the pace of change and innovation within organizations – firstly by not getting in the way, and secondly by providing a platform for operations that drives flexible business services, centralizes data and analysis, ensures security and embraces automation to improve efficiency.

The webinar titled, “The State of Operations and Outsourcing in 2018” was hosted by HfS Research and KPMG on July 12, 2018.  The webinar delivered the results of an annual study/survey that reveals the pace of disruption and change the world's leading enterprises are experiencing. Presenting the results and analysis of the survey were: Phil Fersht, CEO HfS Research; Dave Brown, Partner KPMG; Richard Pierle, CIO Becton Dickinson; and Saurabh Gupta, Chief Strategy Officer HfS Research. 

Technology Expands Outsourcing While Shifting Away from Offshoring

Some of the fundamental results in the study show that “Technology” players are significantly expanding their outsourcing activities compared to other industries as shown in Figure 1.

Figure 1 – Outsourcing Plans Vary by Industry – mature industries slowing down while less penetrated industries are picking up

Source – HfS Research and KPMG

However, consistent with other industries, supply chain and logistics companies are shifting away from offshoring efforts in their business plans.  It's interesting to note that this shift started in 2016 before all of the concerns related to trade and tariffs started capturing headlines.  This would indicate that this change is driven by factors beyond geopolitical worries.  In fact, the results of the survey show that new technologies are capturing the increased focus of company efforts to optimize the customer experience and company operations.  Figure 2 illustrates this shift in outsourcing plans.

 Figure 2 – The Focus On Offshoring Has Diminished Significantly

Source – HfS Research and KPMG

While outsourcing continues to be a key part of company strategies, outsource partners should not be comfortable in their relationships.  In a survey sample of 381 enterprise operations it was found that roughly 70 percent of outsourcing clients expect to change their outsourcing relationship in some shape or form.  Changes include: renewing with current outsourcer but with more outcome focus and increased automation; changing the provider; and automating/insourcing. 

Robotic Process Automation (RPA) Leads Investment Plans

Digital technologies revolving around critical drivers such as automation, artificial intelligence, smart analytics, etc. are topping the list of critical C-suite directives/objectives for operations strategy. One clear illustration of this is shown by the emphasis on investments in RPA technology found in the survey results presented in Figure 3.   

Figure 3 – 2018 Investment Intentions: “Humans-plus-Bots” now the norm

Source – HfS Research and KPMG

Global Business Services (GBS) Leads the Way to the Future

The results shared in this part of the webinar provide the foundation for exploring the implications and challenges of adopting new global business services (GBS) models. For example, there are profound implications for plans to retrain/retain (or not) current employees.  Scrutiny of investments in technologies such as IoT, Cloud and RPA is increasing. All of this points to the benefits of an operations framework that HfS Research calls “Digital OneOffice.”  A concept for emerging organizations that have “fully embraced the digital business models, enabled by an intelligent support capability, where barriers between front and back offices no longer exist.”

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.