Satisfaction levels of UK IT outsourcing buyers

Satisfaction levels of UK IT outsourcing buyers

IT outsourcing buyer organisations in the UK ranked Wipro (80%), Mahindra Satyam (78%) and Cognizant (77%) as the top three performing service providers for client satisfaction, according to EquaTerra’s 2010 UK IT Service Provider Performance Study.

IT outsourcing buyer organisations in the UK ranked Wipro (80%), Mahindra Satyam (78%) and Cognizant (77%) as the top three performing service providers for client satisfaction, according to EquaTerra’s 2010 UK IT Service Provider Performance Study.

The top quartile of all the key performance indicators (KPIs) is formed of service providers with mixed heritages; offshore providers (Wipro and Mahindra Satyam Cognizant); broad-based onshore providers (Capgemini and Siemens); and best of breed providers (Computacenter).

Last year, many western-based service providers gained ground against Indian service providers. This year, however, the Indian firms are back at the top of the list again. They are increasingly beginning to offer more infrastructure management outsourcing services; these services were previously seen as the last part of the retained portfolio of onshore providers. Overall, general satisfaction levels with outsourcing increased again compared to last year.

This is impressive given the strong focus buyers had on cost savings and low price. However, the average scores for most KPIs (except flexibility) have been stable or declined, especially risk (down 5%) and strategic relationship (down 4%). The risk KPI has decreased as more service providers robustly review their positions towards existing accounts and sales pursuits, as a result of the recession and their desire to ensure the sustainability of their own businesses.

The decrease of the strategic relationship KPI may be due to service providers being more tactical in how they manage their accounts. Meanwhile, the increase of the flexibility KPI is likely an indicator of many service providers’ proactive engagement with clients to renegotiate in 2009 at which point issues relating to flexibility will likely have been addressed.

Key drivers of outsourcing strategy

This year’s UK study investigated over 650 outsourcing contracts held by over 220 of the top IT spending organisations in the UK. The total annual value of the contracts included in this study is over £14 billion, accounting for around two-thirds of the total UK outsourcing market in terms of annual contract value. All commercial sectors are represented in the study, as is the public sector, including both central and local government organisations.

Lee Ayling, EquaTerra’s managing director, IT Advisory UK, commented: “As in previous years, the 2010 study provides deep insights into the changing dynamics of the UK outsourcing market. One of the many points of note is that outsourcing contracts which deliver cost savings alone do not lead to higher client satisfaction. But successfully delivering cost savings plus another driver, such as access to skills or time to market, does positively impact general satisfaction – highlighting that both end users and service providers should not focus on price alone before and during an outsourcing relationship.”

Overall IT outsourcing demand continues to grow in the UK market, fuelled by buyers’ needs to respond tactically to recessionary economic conditions by cutting current operating costs.

Cost reduction and flexibility goals dominate, but other drivers become more important, and global sourcing remains a dominant element in organisations’ sourcing strategies, according to EquaTerra. On average, each respondent has evaluated more service providers than in previous years, showing an increase in multi-sourcing. Larger monolithic contracts (with an annual contract value of over £50 million) often relate to lower satisfaction.

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