New research highlights current trends and challenges among the UK outsourcing companies

Posted: June 23, 2010 in Market Research

IT Sourcing Europe highlights the major trends and challenges facing the UK IT outsourcing companies in 2010.

IT Sourcing Europe, a UK-based research company and nearshore IT sourcing advisor, announced today the completion of its UK IT Outsourcing (ITO) Survey 2010. The Survey was conducted in the frames of the IT Sourcing Europe’s All-European ITO Research and aimed to explore the current trends, challenges and problem solving strategies among the UK companies that outsource their software/web development function offshore, nearshore or within the United Kingdom. The Survey was completed by 250 IT decision makers of the UK-based businesses.

The Survey allows us to observe the following ITO trends among the UK outsourcing companies:

  • Although most of the UK companies still outsource their software/web development offshore (at least 3 time zones away from home country), the number of companies outsourcing nearshore (maximum 2 time zones away from) is very close to and is likely to outnumber offshore outsourcers by the end of 2010;
  • Top three reasons why UK companies outsource their software/web development are: to reduce operating costs, to accelerate time to market via flexibility and scalability and to free in-house resources for other business purposes;
  • Web and Enterprise solutions remain the most outsourced ones among the UK companies;
  • Most UK outsourcing companies partner with only one services provider;
  • Low costs remain the key factor impacting the UK companies’ choice of the Outsourcing destination and vendor;
  • The majority of the surveyed companies report 40%-59% actual savings from the outsourced development;
  • Most of the UK companies believe that outsourcing their software/web development has been the right decision.

Among the most frequently cited challenges facing the UK outsourcers are:

  • Delays in product delivery schedules;
  • Poor communication with vendor’s project management;
  • Cultural difference.

The Survey also finds that most of the UK outsourcing companies do not know the exact salaries of each of their team members on the outsourced development team. It means that their current ITO engagement does not allow them to have 100% managerial control of project teams and costs associated with Outsourcing. It creates a huge barrier in the way of successful ITO adoption.

The Report arrives at more thought-provoking conclusions that generally shape the UK ITO landscape of 2010.

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