More people want to take their outsourced IT back in house

The numbers wanting to outsource their IT to an external  partner are declining at the same time as those wanting to take their IT back in house are increasing – much of this is thanks to the cloud. But how satisfied are companies with their suppliers? Here are this year's rankings.

More and more Swedish organisations are putting on the brakes when it comes to outsourcing their IT operations. Instead, the proportion who are insourcing is growing, i.e. taking IT operations back in house. This is a finding from the annual survey conducted across the outsourcing market in the Nordic region by Whitelane Research and PA Consulting, who have reviewed more than 1400 contracts with a 50/50 split between outsourcing and cloud. There is a clear pattern that fewer Swedish companies plan to outsource. In in this year's survey, 23 percent state that they will outsource more, a decrease of five percent compared to last year.

At the same time, 21 percent state that they will outsource less, an increase of seven percent. 

Peter Wardell, sourcing expert at PA Consulting, says: "Many companies are focused on bringing IT expertise back to their own organisation."

"This is a trend that has been going on for a while and now it is peaking. This is particularly clear in the transport sector and in retail. They want to build their own IT organisation. In retail, it is about them wanting to get closer to the customer. In all industries, it is about becoming faster," Peter continues.

Another reason mentioned by Peter Wardell is that many organisations want to increase the quality of IT delivery and also bring in more innovation internally.

Hand in hand with fewer people planning to outsource is another trend - namely that more and more people plan to use cloud services. It is here that developments are advancing dramatically.

One question posed in the survey is: How much of your application portfolio is run today on a cloud platform and what will it look like in two years?

36 percent of those surveyed answered that they will have moved more than half of their applications into the cloud in two years time. This can be compared with 16 percent today. Scalability and agility are the main drivers.

"It is quite clear that the cloud will take over from traditional outsourcing. There are fewer and fewer large outsourcing stores with large data centres," says Peter Wardell.

"The development of customer-oriented services today is taking place in the cloud," he continues.

However, the cloud industry is still immature, adds Peter Wardell. At least in the sense that it is difficult to replace an old supplier with a new one. This is also one of the reasons why organisations are still hesitating about migrating.

"I think that the sourcing suppliers could have an important role to play here. To act as an advisor on how to change cloud provider easily and quickly or how to build multi-cloud strategies," says Peter Wardell.

Swedish organisations would like to see a high ranking European cloud supplier. When asked if they would move "a significant proportion" of what they have in the cloud to a large European cloud solution, more than half of the participants said they were interested.

"This is likely to be a consequence of the organisations wanting to avoid all the legal discussions about data protection that exist around American cloud providers," continues Peter Wardell. 

In addition to identifying new trends in the outsourcing industry, the survey, as usual, also reviews customer satisfaction with these relationships. In this respect, the list is similar to the results seen in recent years.   

TCS is top of the Swedish list again with a customer satisfaction rate of 82 percent, ahead of LTI with 80 percent. They are followed by Fujitsu, Infosys and Wipro at 77 percent and HCL at 76 percent.

At the bottom of the list, ie the suppliers with the lowest customer satisfaction, is Tietoevry with 62 percent, well below the average of 73 percent.

"Essentially, customer satisfaction is aligned with what you agree on and pay for. Those who have close relationships with their customers usually get higher scores.Those who receive lower scores usually have difficulty in responding to rapid change," he adds.

Last but not least, the survey reveals that  organisations in general are satisfied with their cloud platforms. In Sweden, Microsoft Azure, Google Cloud and Amazon Web Services have the same rating with a customer satisfaction of 78 percent.