What is the State of the Industry? Here’s a Sneak Peek at our Findings for the Outsourcing World Summit 2016


For the second year running, ISG partnered with IAOP to conduct the annual State of the Industry Survey. The survey was sent to more than 100,000 buy-side clients, service providers and third-party advisors. The focus of the survey is to take the pulse of the outsourcing market and to track movement on recent trends like the adoption of social, mobile, analytics and cloud (SMAC) technologies. The survey is also a vehicle by which we can gauge interest in new hot topics like robotic process automation, digitization and the Internet of Things (IoT).

One compelling storyline of this year’s survey is the market’s readiness (or lack thereof) to implement new technologies, specifically SMAC. We found a definite gap between how and to what extent buy-side clients say they want to implement SMAC technologies and how and to what extent service providers are integrating emerging technologies into their delivery models.

I don’t want to steal the thunder from the keynote presentation to be delivered later today by IAOP’s Jag Dalal and ISG’s Harvey Gluckman, but I don’t mind sharing a few juicy tidbits here. The survey data indicates only one percent of buy-side clients said they will implement an IoT solution in 2016, while 24 percent of service providers said they will or are already implementing IoT solutions. Only 13 percent of buyers said they may implement big data solutions in 2016, while 35 percent of providers said they will or already have such solutions in place. And what about robotic process automation? The differential was similar: seven percent of enterprise clients said they will implement it this year and 19 percent of providers claimed they will. The numbers point to one thing: service providers are staying ahead of the curve and preparing the way for the digital business of the future.

This trend is evidence of a shift away from the last few years when the industry talked at great length and in such abstract terms about SMAC without much to show. Cloud computing, for example, remained a theory for so long that executives were not able to determine how they might use it or to what advantage. They remained unconvinced and, in many cases, made little progress in implementing SMAC technologies. When cloud capabilities finally did come to market, the business units—which had grown tired of hearing IT talk about the potential of cloud without seeing any movement—ran full steam ahead, searching for and buying individual cloud solutions to meet their needs.

Today, we are finding that service providers are embracing the idea: if they build it, clients will come. They are responding to the needs of enterprise leaders—most of whom want to see a mobile or analytic tool, understand how it works and fully grasp how it can specifically enable business growth—before they are willing to take action. In this spirit, many service providers are setting up innovation hubs where clients can directly experience the cutting-edge digital solutions as they are in development or already in production.

As the industry is finally getting its collective head and hands around the value of cloud and the applicable use cases for mobile solutions, we are still seeing some reluctance from buy-side clients to jump headlong into the investments required for big data and analytics. Clearly, the way is being made ready for them to capitalize on these disruptive technologies. Perhaps the proactive effort of service providers to show instead of tell will be what is needed to spur tentative enterprises toward a digital transformation.

Harvey Gluckman, partner at ISG, will join Jag Dalal, Chief Advisor of IAOP, on stage today, Monday, February 15 at 1:30pm to deliver the State of the Industry keynote presentation.

Visit us at Disney’s Yacht Club Convention Center, at booth #58 at IAOP OWS16 this week.

About the author

Jan Erik has more than 30 years of experience as a client. At both American Express and Ameriprise Financial, he lead vendor management offices and managed strategic outsourcing relationships. As an industry analyst at Forrester Research Inc., he conducted and wrote research on the topics of innovation, the future of outsourcing, sourcing models, risk, governance, captive centers, testing and alternative markets. As a service provider at Infosys, he was accountable for helping clients improve the relationship and value they were getting from their outsourcing engagements. At ISG, he has worked as an advisor and consultant assisting clients and service providers implement service integration and management (SIAM) models and the governance processes that support them. Now, as a director and principal analyst with ISG Insights, he continues to research, analyze and write about the industry.