Image Image Image Image Image Image Image Image Image Image

Outsource magazine: thought-leadership and outsourcing strategy | September 21, 2017

Scroll to top

Top

One Comment

Specialists are outsourcing’s A-Team…

Specialists are outsourcing’s A-Team…
Daniel Sasaki

Specialist outsourcing is on the rise and a number of factors are behind this trend. Companies are seeking more sophisticated skills and capabilities to adapt to the ever-faster pace of change in business. They are also looking for support to cope with the increasing complexity of sectors and markets and more specialist outsourcers to help maintain their expansion into new markets and deliver the higher-quality products and services vital for survival in the still tough economic climate.

In light of this trend, here are my top five specialist outsourcing sectors to watch…

Security

Security outsourcing is a large area including a variety of service offerings. In total, it now produces annual turnover of over £6.5bn. Growth is being driven by needs outside the capabilities of most businesses: increasingly sophisticated IT security, guard services, security systems integration and monitoring, which will all be even more in demand when building construction and renovation begins to recover.

Another key driver is the public sector appetite for security outsourcing. A large number of prisons are already privately managed and now the UK government is even considering outsourcing its Ministry of Defence procurement functions, which would open up new security outsourcing opportunities.

Legal

Since 2008, the global legal process outsourcing (LPO) market has swelled from £200m to an estimated £1.5bn. Moreover, if LPO follows a similar path to BPO and ITO, it looks set to move up the value chain to more added value, ‘blue chip’ work. This would increase the capacity of outsourcers to meet growing demand. The rapid growth in LPO has been facilitated by the Legal Services Act of 2007 as well as its low cost as compared with in-house options.

Health

The turnover of frontline healthcare services outsourcing in the UK is £12bn and growing, fuelled by public sector demand. Also, SMEs are increasingly beginning to service the health sector. For example, Kwickscreen provides portable room dividers to the NHS, DrDoctors offers software allowing patents to track hospital parking spaces and Qinec designs and runs GP practice management software. Even hospital management is opening up to outsourcing: Circle Healthcare, a private company, now provide a full range of hospital services at Hinchingbrooke Hospital in Cambridgeshire after a landmark part-privatisation agreement in 2012. This might set a precedent for private involvement in the NHS that could present significant outsourcing opportunities.

Information technology

The powerhouse that is ITO shows no signs of slowing. ITO is the largest contributor to the UK’s outsourcing sector with an annual turnover of over £40bn and this is expected to grow.

A major driver of the growth of IT outsourcing is technology diversification. Companies are no longer looking for suppliers who can only manage their basic business technology infrastructure such as their office networks. Instead, suppliers need to be able to offer services such as cloud solutions and advanced social analytical processing.

Food and service management

Over the past 20 years, annual turnover in FSM has doubled from £2bn to £4bn. Now there is evidence suggesting that the rate of growth is increasing – £1bn was generated in 2009-2011 in catering alone – securing the sector’s place as one to watch. A key factor in this growth is public sector FSM outsourcing: it is now the third highest spend for government departments.

Comments

  1. Bright Future Software LTD

    Diversification is a growing trend. Businesses now need highly customised solutions tailored to match their specific requirements. Businesses are trying to find their point of difference in order to compete in more and more specific niches. Outsourced bespoke solutions help businesses analyse and compete effectively.

Submit a Comment