From a talent crisis and growing ESG priorities, to geopolitical uncertainties and shifting sourcing strategies, the impact of recent global developments have changed the way the sourcing marketplace operates — and innovates.
The increased pace in digital transformation and partner thinking has done little to slow down its evolution. In the latest KPMG Sourcing Trend Radar 2022, we explore key digital and business process sourcing trends that are reshaping the market and a five-year forward view of what is to come.
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Key sourcing trends
Access to talent
Turnover rates in the outsourcing industry are increasing, causing a talent crisis worldwide. In lower cost countries, the attrition rate varies between 30% and 50%. This increase is driven in part by a surge in demand , after the economic slowdown from the onset of the pandemic and the impacts of global political instability. Both clients and providers will need to broaden their reach, accessing talent worldwide to battle these challenges.
Geopolitical-resilient sourcing models
Geopolitics can have a profound impact on sourcing operating models. In response to recent developments, governments of leading near-shore and offshore destinations are focusing on improving their competitive advantage. They will also need to seek out resilient sourcing options to brace against potential impacts on business continuity and foreign investment arising from global political shifts.
With ESG concerns becoming top of mind for most businesses, the pressure is on for outsourcing service providers to step up their ESG efforts and proactively disclose their outcomes to gain a competitive advantage. Organisations looking to outsource or review their current outsourcing relationships should consider alignment of ESG goals across their portfolio of service providers to further extend the sphere of influenceable change. Service providers on the other hand should realise that ESG is a competitive differentiator and consider making significant investments to further align to client goals.
The market is shifting from a focus on transaction-based outsourcing cooperation towards relation-based outsourcing cooperation. Relation-based outsourcing emphasises a better understanding of mutual dependencies and complementary capabilities. For example, an organisation may choose different vendors for functional platforms and allocate activities among vendors based on the required skills and competencies.
The rise of ecosystem-based partner models
The increasing digitalisation of client value chains has resulted in a growing amount of (inter)dependencies between clients, digital solutions and respective service providers. Managing these (inter)dependencies in a fast-paced market is difficult to organise internally. In 2022, clients are accelerating the creation of 'partner ecosystems' to facilitate more effective management of the abovementioned (inter)dependent and complementary capabilities.