Reactions to outsourcing sector improvements

Arvato has published its index on outsourcing in the UK for the quarter and this time around there is a clear trend, according to reportage from the Global Banking and Finance Review – retail and financing are the strongest-performing sectors, with agreements totalling £718m signed between January and March.

Customer service was the most important element of BPO.

It’s worth putting a caveat or two in. First, a particular financial quarter or two can only tell you so much – although we’re the first to agree that the quarter that gave us the Carillion collapse could have been a lot worse than this for the outsourcing sector. Second, Arvato only tracks substantial deals so this takes no account of the small business market and we suspect an aggregation of all of those mini-deals would change the picture a little.

Nonetheless in terms of large scale deals it’s an important benchmark. Intelligent Sourcing has had comment in from Chris Sood-Nicholls, managing director and head of global services at Lloyds Bank Commercial Banking, which we produce in its entirety:

 “In what has been a challenging start to the year for the outsourcing sector, the growth in spending by financial services and retail businesses goes to show how outsourcing can be used as both a tactical and strategic tool to help deliver for companies experiencing material change in their sectors.

“Whether due to regulatory reform, subdued trading or structural reforms through digitalisation, both sectors are under pressure to improve performance while delivering long-term cost savings. This is exactly where outsourcing can help.

“Meanwhile, we don’t expect the slowdown across outsourcing to be anything more sinister than a pause for both sides to draw breath.

“Given the events of this year, some commissioning organisations will review their vendor contingency plans. At the same time, some providers might want to use this period to boost flexibility for unforeseen events.

“However, while that could lead to a slightly fallow year for outsourcing, we ultimately don’t see any reason to fear anything more severe. Outsourcing can offer a competitive choice and bring innovation to firms seeking to divest non-core activities and focus on their core business.”

Intelligent Sourcing would largely agree with those comments. No matter what the headlines say, the pressure is still to reduce costs – and this is where outsourcing, whether in the form of robotics or offshoring, is likely to be a major part of large business strategy in the short, medium and longer term.

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