Organisations in the UK are increasing the amount of IT work they outsource to enable them to access skilled professionals, with a focus on automation technology and global distribution models.

Date published : 2024/10/29 22:51

The UK IT outsourcing sector is witnessing significant growth, driven by the increasing demand for access to talent among organizations in the country.

A recent survey conducted by PA Consulting and Whitelane Research revealed that 63% of UK organizations plan to continue or increase their IT outsourcing over the next 12 months, with nearly a third planning to spend more. The main reason cited for outsourcing was the need for talent, particularly in the public sector (83%) and financial services firms (62%).

The survey also highlighted that automation technology is the top priority for organizations investing in IT, with 58% opting for automation services contracts to reduce costs and minimize staff recruitment. Over half of the respondents mentioned simplifying and consolidating IT as a driver for outsourcing.

IT transformation expert Manish Khandelwal emphasized the need for organizations to rebalance their technology delivery organization and operating model in response to economic pressures and talent shortages. He noted that the outsourcing industry continues to thrive, with innovative players poised to grow stronger.

The survey found that more organizations are adopting global distribution models, with 33% setting up outsourced operations offshore in locations like India and 27% in nearshore regions in Central and Eastern Europe. The report also revealed high satisfaction rates among organizations with their IT services suppliers, cloud service providers, and software platforms in the cloud.

However, despite continued demand from businesses to restructure their IT, the UK IT services market experienced a decline in the first quarter of this year due to global economic uncertainty. According to ISG figures, spending on IT and BPO services in the UK fell 2% compared to the same period last year, with a significant drop of 36% from the final quarter of 2022.