Half Of All Enterprises Expanding Outsourcing In 2013, Says KPMG Survey

NEW YORK, July 8, 2013 /PRNewswire/ -- Five-out-of-ten major enterprises intend to increase the volume of application development and maintenance outsourcing during 2013, with four-out-of-ten intending to increase Finance and Accounting outsourcing, according to new research from U.S. audit, tax and advisory firm KPMG LLP and HfS Research, a leading analyst authority on global business operations strategies.

The survey, "State of the Outsourcing Industry 2013," which covers the viewpoints, dynamics and intentions of 1355 senior leaders from major global enterprises, outsourcing services providers, management consultant firms, sourcing advisory firms and other key industry influencers, found that client expectations of outsourcing are evolving to be more value focused, with IT, Finance and Accounting administrative processes dominating future outsourcing plans. Achieving operational effectiveness when they outsource, specifically for cost reduction, greater scalability of operations and process standardization, continues to be the primary motivation behind IT and business operations outsourcing for more than three-quarters of survey respondents.

Cliff Justice, lead partner for KPMG's Shared Services and Advisory group said, "It's abundantly clear that the vast majority of enterprises are looking to expand strategic outsourcing relationships in the medium-term as economic conditions improve.  While many held back from radical transformation strategies during the recession, we're now seeing real action from many enterprise operations leaders who are ratcheting up their sourcing plans – especially with their administrative business processes."

Additional findings from the survey include:

• Core areas of strategic focus when outsourcing include accessing better talent (70%), gaining access to better technology (62%) and improving analytical capabilities (62%).
• Mid-market enterprises ($1bn-$5bn revenues) are much more motivated by strategic needs than high-end enterprises (more than $5bn revenues).
• Outsourcing customers are satisfied with cost-reduction and standard delivery from service providers (88% are satisfied), but indicate service providers are falling short in strategic areas, such as improving analytical capabilities, access to talent and achieving innovation.
• BPO engagements are notably outperforming IT Outsourcing engagements for cost reduction, effectiveness, and process standardization, process transformation and improving analytical capabilities.
• Outsourcing adoption is still very nascent for business processes, with only 23% using outsourcing as the predominant model for accounts payable processes, 19% purchasing and accounts receivables, and 11% for recruiting and staffing.
• Close to a third of high-end enterprises view Global Business Services as a mission-critical framework for their future operating model.

Phil Fersht, CEO of HfS Research said, "The study clearly shows operations executives are seeking to take more advantage of global sourcing models rather than traditional outsourcing models.  In addition to broadening service provider relationships, this involved enterprises evolving into Global Business Services operating models that focus on greater control, customer alignment and accountability over business operations."
For more information on State of the Outsourcing Industry 2013, click here to visit KPMG Advisory Institutes.

About KPMG LLP
KPMG LLP, the audit, tax and advisory firm (www.kpmg.com/us), is the U.S. member firm of KPMG International Cooperative ("KPMG International"). KPMG International's member firms have 152,000 professionals, including more than 8,600 partners, in 156 countries.

About HfS Research 
HfS serves the research and strategy needs of business operations leaders across finance, supply chain, human resources, marketing, customer management, IT and core industry functions. In addition to researching business operations strategies, HfS educates and facilitates discussion among the world's largest knowledge community of enterprise services professionals, currently comprising 120,000 subscribers.  HfS Research also facilitates the HfS Sourcing Executive Council, the acclaimed elite group of sourcing practitioners from leading organizations, which meets on a bi-annual basis to share the future direction of the global services industry and discuss the future enterprise operations framework. Now in its sixth year of publication, HfS Research's acclaimed blog "Horses for Sources" is widely recognized as the leading destination for unfettered collective insight, research and open debate of sourcing industry issues and developments.

SOURCE KPMG LLP