As-a-service solutions have grown 17%

The market research institute ISG currently sees the outsourcing market in Europe “at record heights”. This is mainly due to the DACH region (Germany, Austria, Switzerland). The ISG Index, for which all commercial outsourcing contracts with an annual volume of at least four million euros are taken into account, rose there in the first half of 2019 by a total of 12% compared to the same period of the previous year.

While Business Process Outsourcing (BPO) increased by only 1% to EUR 1 billion, IT Outsourcing grew by 12% to EUR 4.7 billion. The contract volume for the Managed Services business rose by 10% to EUR 1.4 billion, while as-a-service solutions boomed by 17%. Of this, Infrastructure-as-a-Service increased by 19% to EUR 2.4 billion and Software-as-a-Service by 9% to EUR 846 million.

Various forms for “Outside Resource Using”

“Today, numerous different forms of outsourcing are distinguished,” says Prof. Dr. Thomas Rautenstrauch, Head of the Business Analytics & Technology department at the Zurich University of Applied Sciences (HWZ). The “Outside Resource Using” could be classified according to very different criteria. For example, a distinction could be made according to the location of the relocation: Onshoring (in one’s own country), off-/farshoring with an outsourcing partner in a (distant) foreign country or nearshoring (in a neighboring country with a similar cultural background).

With regard to scope, “insourcing” describes the commencement of new activity within the company that has not yet been taken over by it. With “selective outsourcing”, only part of a process or function is outsourced, whereas with “full outsourcing” at least 80 percent or more of a process or function is outsourced to an external supplier.

Finally, the outsourcing intensity can also be differentiated: In “out-tasking”, only individual task areas are outsourced, while in “operational outsourcing” complete business processes are no longer handled by the company itself. “Strategic outsourcing”, on the other hand, describes the transfer of core activities or value-added processes to third-party companies.

Disruptive outsourcing is the new trend

According to a recent survey by the consulting firm Deloitte, traditional outsourcing is dead and will increasingly be replaced by disruptive outsourcing in the future. The focus is shifting from traditional work transfer to upfront transformation and automation. Organizations are recognizing that disruptive solutions can revolutionize the way they do business, and that “buying” capabilities in the marketplace is generally faster and more scalable than developing capabilities internally.

Emerging solutions incorporating cloud and automation are empowering organizations to work smarter, scale faster, reach new markets, increase productivity and, ultimately, to gain competitive advantage. “The primary goal is to accelerate innovation, increase effectiveness or expand the business,” says Rautenstrauch. 59 percent of respondents in the Deloitte-survey want to bring products and services to market faster. The technologies required for this, such as cloud computing, robotic process automation (RPA) and artificial intelligence (AI), give companies the opportunity to use outsourcing to realign their own business models.

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