1st Qtr 2014 KPMG Sourcing Advisory Global Pulse Survey | KPMG | BE

1st Quarter 2014 KPMG Sourcing Advisory Global Pulse Survey

1st Qtr 2014 KPMG Sourcing Advisory Global Pulse Survey

Based on market activity from January through March 2014, the 1Q14 Pulse survey report provides insights into trends in end-user organizations' usage of global business services (GBS).The learnings are gleaned globally from KPMG firms' advisors, who work closely with end-user organizations that are actively exploring or undertaking domestic, near and offshore shared services and outsourcing, and other service delivery initiatives, as well as from leading third-party global business and IT service providers.

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Shared Services and Outsourcing Advisory (SSOA) 1Q14 Global Management Consulting Pulse Survey Key findings

The current economic and political outlook has market pundits predicting the slowdown or reversal of trends toward global services delivery and globalization in general. But organizations should take these predictions with a grain of salt. Few buyers are pulling back from the globalization of service delivery conceptually – but they are savvier about what services to source and where to source them.

This is one of the key findings from KPMG International’s April 2014, SSOA Pulse Survey of leading business and IT service providers and sourcing advisory professionals.

Global approaches continue to prevail

Despite signs of economic recovery, it is no surprise that some commentators foresee a pullback from global strategic sourcing: 

  • Deficits and increasing political gridlock are ongoing struggles for many countries.
  • Growth rates are uncertain in the European Union, and the divide between southern and northern countries and markets in Europe continues to widen.
  • Economic growth is slowing in the BRICs (Brazil, Russia, India and China).
  • Political turmoil in Central and Eastern Europe, especially Ukraine and Crimea, is raising concerns among users sourcing services from these regions. 

KPMG firms’ professionals and service providers say their clients are not pulling back from global services business models. They say organizations are continuing to take a global approach (onshore/nearshore/offshore) for outsourcing and shared services. And while increased insourcing for strategic and particularly transactional services is occurring more often than in the past, it remains much more the exception than the norm. 

Regardless of current market conditions, companies that previously embraced a global outsourcing model are making clearer distinctions between strategic and transactional outsourcing. In these cases, companies are choosing to insource the strategic portion of the work, to source an expert group for that core strategic function or pursue the use of shared services in lieu of outsourcing. 

Changing buying patterns

While the growth of global sourcing for services continues, buying patterns are changing and include the use of more local or nearshore resources for certain services. For example, one KPMG advisor observed that service centers in Eastern Europe are servicing more EU clients. 

Looking ahead to the next 24 months, the most-named trend for respondents is that outsourcing buyers are growing more interested in offshore services delivered from locations other than India. This trend has been occurring for several years, as the number of quality and viable global sourcing locations expands and Indian service providers themselves diversify delivery capabilities beyond their home market. 

Advisors nor service providers do not see buyers pulling back from global sourcing in general or in their use of India-based service providers overall.

Current Market Conditions impact on Global Sourcing

What's driving change for global services delivery?

  • Organizations’ aspirations to embrace and expand a global business services operating model (i.e. integration of shared services and outsourcing efforts across functions and geographies) often outpace the maturity of capabilities to excel at their efforts. To drive improved maturity, organizations need to give priority to end-toend process ownership and the governance across and between the shared services and outsourcing that compose global business services.
  • Use of data and analytics to better monitor and leverage skills and resources to improve overall business performance should be high on companies’ agendas.
  • Improving talent management capabilities to find attract, and retain the talent required to staff a competitive global services business should be another key priority. Given prevailing required skills shortages in all markets, organizations that can improve and excel at talent management can win a distinct competitive advantage.
  • Organizations should move beyond a focus on just back-office business operations (e.g., finance and accounting, human resources, sourcing and procurement) and assess the benefits of including other services in the global services mix, such as supplier management and monitoring, customer care, and real estate and facilities management.

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