9 Key Insights from Deloitte’s 2022 Global Outsourcing Survey
Deloitte’s Global Outsourcing Survey 2022 offers a deep dive into the strategic changes impacting the world of talent management and outsourcing. As businesses navigate the challenges and opportunities of a digital, interconnected landscape, understanding these trends is critical.
The Global Outsourcing Survey identifies key shifts from traditional cost-driven outsourcing to a focus on talent acquisition and capability enhancement. Let’s break down these findings to comprehend how the evolving landscape of outsourcing is impacting industries worldwide.
1. Shifting Priorities in Outsourcing: From Cost to Talent and Capabilities
The report reflects a significant shift from cost-driven outsourcing to strategic talent acquisition and capability enhancement. Traditionally, businesses turned to outsourcing primarily as a cost-saving measure. However, the survey data reveals a paradigm shift. Organizations are increasingly focusing on talent acquisition and capability enhancement, seeking strategic partnerships with service providers. This shift suggests that the battle for the right talent with the right skills at the right price has become the central challenge in today’s digitally transforming world.
Executives reported talent acquisition as their top internal challenge, and many are turning to outsourcing to address this issue.
2. Cybersecurity and Data Analytics Lead Outsourcing Priorities
Cybersecurity has emerged as the leading external challenge faced by executives in achieving their strategic objectives. In the Global Outsourcing Survey of 2018, a staggering 95% of companies confirmed they had established cybersecurity risk measures. Fast forward to today, and a contrasting picture emerges – only 52% of executives feel equipped to confront their cybersecurity hurdles.
Addressing this challenge has led organizations to tap into the service provider ecosystem, seeking fresh cybersecurity capabilities. This change is reflected in the fact that 81% of executives have turned to third-party delivery models to bolster their cybersecurity functions. Additionally, executives express high demand for data analytics, with 96% of them indicating they source these capabilities from service providers.
3. Evolution of Delivery Models: The Rise of Operate Services
A trend towards ‘Operate Services’ is emerging in response to the changing nature of talent acquisition. Instead of merely outsourcing tasks, companies are now looking for service providers that can offer on-demand access to hard-to-source talent and expertise on technology and transformation. This shift allows businesses to seamlessly integrate external capabilities into their core operations, resulting in enhanced value creation.
4. Rise of Global In-House Centers (GICs) and Build-Operate-Transfer (BOTT) Model
As a part of their talent management strategy, organizations are increasingly turning to models such as GICs and BOTT. These models offer a way to manage complex functions in-house, gain more control over talent and innovation, and ensure long-term cost-effectiveness. As remote working becomes the norm, companies are comfortably leveraging these models to tap into global talent pools.
5. Emergence of Latin America as a Prime Outsourcing Destination
The landscape of outsourcing has long been dominated by India as the top destination. However, the Global Outsourcing Survey 2022 suggests that this narrative is gradually evolving. While India continues to be a pivotal hub, companies are beginning to feel an over-reliance on the region and are seeking alternative geographies amidst heightened competition and greater access to global talent.
Executives are exploring new regions such as Eastern Europe and Asia-Pacific nations, offering robust talent pools and cost-effective services. North America too, is being increasingly considered as a viable option for outsourcing efforts. However, it’s Latin America that stands out in the conversations, fast becoming a compelling destination for outsourcing.
Latin America’s emergence as an attractive outsourcing destination is driven by its strong business and technology talent pool, improved infrastructure, and substantial time zone and cultural alignment with North America. This compatibility presents an ideal scenario for same-time-zone operations and adds a significant advantage over other regions.
This trend towards Latin America and other regions signifies a strategic shift in geographic diversification in outsourcing. Companies are not just focused on cost-effective solutions anymore, but also on the talent capabilities and strategic alignment that different regions bring to the table. The spotlight on Latin America underscores the region’s rising prominence in the outsourcing world and the reevaluation of traditional outsourcing destinations.
6. Valuing Collaboration and Cultural Fit in Outsourcing
The significance of collaboration and cultural fit in successful outsourcing relationships cannot be overstated. These elements, often undervalued, are fundamental drivers of a well-functioning ecosystem. Yet, the strategic priorities projected by organizations for the next two years show a surprising discrepancy.
The Global Outsourcing Survey 2022 reveals that only 27% of executives anticipate an increase in ‘collaboration across the organization’. And merely 17% consider an increase in ‘collaboration with providers’ as a top strategic priority. The disconnect extends to the ‘cultural fit’ aspect as well, often considered vital for a smooth partnership with providers. Yet, only 22% of executives regard it as a main concern during provider selection.
These statistics emphasize the need for a potential reevaluation of strategic priorities in outsourcing. As companies reassess their outsourcing strategies in the light of the evolving landscape, greater emphasis should be placed on fostering stronger internal and provider collaborations, and on ensuring cultural alignment with providers. This reorientation could pave the way for more productive and harmonious outsourcing relationships.
7. Transformation of Service Level Agreements (SLAs)
The report notes a decline in the relevance of traditional SLAs. Only 19% of executives now consider them crucial, indicating a shift towards relationship-centric performance measures that emphasize quality and depth in outsourcing partnerships.
8. Vendor Management: From Isolation to Ecosystem Approach
As the complexity and number of third-party choices expand, organizations are moving towards a holistic ecosystem management approach. This approach places a premium on transparency, cultural alignment, service integration, and trust, transforming traditional vendor management practices.
9. Vendor Selection Criteria: Strategy Over Cost
The criteria for vendor selection have also evolved, shifting from cost-centric to strategy and capability-centric. Third-party vendors are now being viewed as strategic partners driving business objectives rather than merely service providers.
The shifting landscape of talent management and outsourcing as highlighted in Deloitte’s 2022 Global Outsourcing Survey offers both challenges and opportunities. Navigating these changes requires a nimble approach, flexible strategies, and a keen understanding of these evolving trends.
At our staff augmentation agency, we align ourselves with these trends, providing tailored solutions that resonate with today’s dynamic corporate environments. With a strong focus on strategic talent acquisition, our services are designed to not just keep up with the change but to leverage it for your benefit.
Whether you’re looking to tap into new talent pools, enhance your capabilities, or future-proof your operations, our team is ready to help. Let’s embark on this journey together, leveraging the power of strategic outsourcing to drive your business forward in an increasingly digital and interconnected world.
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