outsourcing stock

UK companies are using outsourcing to improve customer service, not just save money, according to analysis of £10 billion-worth of 490 UK outsourcing contracts by consulting firm KPMG.

Analysis of current corporate IT spend is also said to reveal that as the economy improves, organisations "are determined to invest in emerging technologies if they believe it will boost customer services".

The annual KPMG "Service Provider Performance and Satisfaction" study reveals a 20 point increase in the "search for quality improvement" since the issue was first raised in 2009, as 48% of respondents say they based decisions to outsource on a desire to improve service levels.

But with many organisations still short of key staff due to cutbacks over the past five years, said KPMG, "it appears that organisational capability to deliver improvements remains impaired" and "this is why 56% also cite 'the need to access skills' as an influential factor behind their decision".

KPMG's report suggests that as IT outsourcing expands, there will be an end of "out of sight" agreements as business mindsets shift from a determination to "find the cheapest market at all costs" to one of having closer control over outsourced functions.

This year, for example, just 23% intend to expand global outsourcing for customer service management programmes - down from 39% in 2012.

Jason Sahota, a director in KPMG's shared services and outsourcing advisory team, said: "The temptation may be to shift key services beyond the walls of an organisation, but there is a growing realisation that this does not shift accountability.

"On the contrary, many organisations want to see aspects of outsourced operations happening closer to home, particularly when it comes to trying out new technologies. This way it is easier to monitor and adjust actions if customer needs change, and quicker to make changes if things go wrong."

According to the findings 77% of respondents confirmed they intend to continue to outsource at the same rate as current levels or increase levels of outsourcing. Almost half (45%) claimed they will "certainly" or "probably" increase IT outsourcing over the next 12 months, a figure that has more than doubled from 19% last year.

KPMG also found that organisations are increasingly adopting cloud strategies in addition to established outsourcing activities. For instance, it found 72% see cloud as complementing traditionally outsourced services. A further 64% of organisations say they have either adopted cloud technologies already, or will do so before the end of 2014.