Accelerating towards automation-based outsourcing

Accelerating towards automation-based outsourcing

Key trends in the Nordic Pulse Survey reflect an optimistic outlook for 2019 with growing momentum in the shared services and outsourcing market.

Beach and water

Key trends in the Nordic Pulse Survey reflect an optimistic outlook for 2019 with growing momentum in the shared services and outsourcing market. Armed with more advanced technologies to automate activities, in 2019 service providers will witness a forced acceleration in the evolution from labour to automation-based outsourcing. This transition will create both great opportunities and new challenges for service providers and user organisations alike.

Demand for outsourcing to normalise in 2019
This year’s Pulse Survey indicates that Nordic demand for outsourcing services will return to form following a disruptive 2018. Most Nordic service providers experienced an increasing pipeline in the last quarter, and the growing pace of customer demand is expected to persist in 2019. Organisations continue to benefit from passing off transactional work to third parties, regardless of whether it is performed by cheap labour or automation technologies. There is, however, a divide between service providers that are slow or resistant to support the new delivery model and those eager to embrace technological change and innovation. The former group may face the prospect of long-term decline as they cannot live up to client expectations.

Ongoing and major developments in automation technologies mean organisations will continue to redefine contract pricing, service levels and overall terms and conditions. Service providers in the Nordics indicate that contract profitability for both existing and future contracts will remain stable, though findings point to an acceleration in the pricing aggressiveness of contracts in 2019. Fewer deals from a more competitive market could be to blame, as the Nordic region is increasingly viewed as an attractive and favourable place for service providers.

Demand growth across public and private sectors
Like previous years, demand for outsourcing services is distributed across a variety of functions and industries in the Nordics. Still, service providers identify two sectors with the strongest appetite for outsourcing services: Banking, Financial Service, Industries (BFSI) and Manufacturing. Since 2015, these two areas have consistently and most frequently incorporated outsourcing as part of their delivery models. Demand in other areas is more volatile, with a slowdown in Consumer Packaged Goods (CPG), Food and Beverage, and growth in sectors such as Government and Telco.

Driving down operating costs and intelligent automation
This year’s Pulse Survey highlights several focus areas. Driving down operating costs and intelligent automation emerge as top priorities for clients and prospects in 2019. In this context of greater technological availability, organisations are focused on reassessing their operating models.

The changing technological environment, however, necessitates new requirements and skills. It comes as no surprise that outsourcing ambitions will continue to suffer from talent and skills shortages. But, organisations in the Nordics appear ready to tackle these challenges, as our data shows that one of their main priorities in 2019 is to attract and retain talent.

No doubt, this will be an interesting year to track the increased demand in the shared services and outsourcing market, as we abandon traditional models and transition into a new generation of outsourcing.

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