A New Normal for Shared Services and Outsourcing

Stan Lepeak, Director, Global Sourcing Advisory Research, KPMG in the US

In terms of macro trends, a hot term in the market today is ‘new normal’. New normal in terms of the economic conditions and new normal in terms of debt, unfortunately. But also what we see is a new normal in terms of how businesses are approaching the delivery of their back and front office services. The challenge today is, how do you design, deploy, manage and optimize a portfolio of service delivery offerings, particularly on a global scale?

Reducing operating costs remains a top priority for end user organizations’ service delivery improvement efforts, but buyers also seek a variety of other benefits above and beyond cutting costs. These include improved global service delivery capabilities, greater financial and business process flexibility, and improved process performance. As a result, a key challenge that remains is to balance cost cutting and process improvement agendas and needs.

KPMG Shared Services and Outsourcing Advisory’s Second Quarter 2011 Pulse Survey results point to the fact that organizations are continuing to utilize outsourcing; slow and steady growth is how I describe it. While it’s not growing as fast as it was coming out of the last recession seven or eight years ago, it is important to note how the market has evolved during this period.

Cloud computing, which is a close cousin to outsourcing in many cases, should be considered when looking at total market growth. Cloud computing adoption appears likely to become an increasingly dominant service market trend. Buyers for now are focused on the more important but less glamorous aspects of cloud computing, such as business case development and validation, pricing and pricing model assessment, legacy systems migration plans, and time line development.

The Pulse report and webcast, both of which cover a wide range of current issues and trends including global sourcing and deal pricing, are available here.

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