Stan Lepeak, Global Research Director, KPMG LLP Advisory
Marc Stark, Director, Management Consulting, KPMG LLP Advisory
KPMG released the results of the 2012 edition of the global Legal Pulse survey via a webcast on March 27. This was the third annual edition of the legal Pulse, one of the family of recurring Pulse research studies. These Pulse surveys provide insights into trends and projections in end-user organizations’ usage of global business services (GBS) with the legal Pulse focusing specifically on outsourcing. The learnings are gleaned from third party counsel at some of the world’s top law firms that support buyer outsourcing efforts.
One topic on which KPMG polled third party counsel was in the trends and drivers of outsourcing contract complexity. In this year’s study, 41 percent of the counsel surveyed indicated that complexity in contracting for outsourced services has been increasing over the past year (see first figure). This level is up slightly year over year with the greatest increase occurring in the European market (see second figure). One potential reason for this higher level is the challenges associated with contracting a longer term outsourcing effort in a region with a volatile and uncertain economic environment.
One might speculate that as the outsourcing market matures and buyers and their in-house and outside counsel become more experienced in contracting, that the level of complexity would diminish. This is clearly not the case. The results illustrate that the nature and type of outsourcing efforts undertaken by clients are becoming more complex from a variety of perspectives, and that the contracting for outsourced services is not getting simpler because of trends such as greater standardization or more use of cloud services. So while individual deals in some cases may become more straightforward, a client’s growing portfolio of outsourcing efforts is not.
The increase in contract complexity is not surprising given the general increase in complexity of outsourcing deals pursued by buyers in the market today. Increased complexity is driven by a variety of factors including more complex outsourcing terms and conditions, more multi-sourcing, and more use of global service delivery models. Greater complexity does not necessarily have a bad or negative connotation, assuming buyers and their service providers can adequately account for it in outsourcing contracts, service levels, and operating and governance models and processes.
To access findings from other recent KPMG market trend surveys, please view our whitepapers on the KPMG Shared Services and Outsourcing Institute.