Why Large Enterprises Opt for Managed Services

IDC Survey in Western Europe Reveals 45 % Choose Outsourcing for Lack of IT Fit for New Technologies

"We are digitizing" is one of this year's most popular statements. In some cases, however, a company's IT infrastructure can put an early stop to that ambitious endeavor. A recent study by IDC and Comarch has shed some light on the outsourcing experiences of 130 top enterprises with over 500 employees from sectors such as manufacturing, trade, service, etc. as well as on their reasons for outsourcing. How are enterprises coping? Does outsourcing one's IT really pay off?

A large-scale survey on IT outsourcing was conducted in September 2018. The 130 companies that took part each have more than 500 employees and operate in Germany, France, the UK, and/or the Benelux countries (i.e. in Belgium, Luxembourg, or the Netherlands). The participants included enterprises from the following sectors: manufacturing (discrete manufacturing and process manufacturing), professional services and consumer services, financial services (banking services, insurance services and others), retail, wholesale and utilities (electricity, gas/heat and water), the media and entertainment industry, as well as transportation and logistics.

As diverse as those sectors might be, they all share a common denominator in their respective efforts to digitize their processes, services and products. The trend towards outsourcing is mostly driven by three decisive factors.

Why Do Large Enterprises Opt for OUTSOURCING?

This is how 130 Western European companies with over 500 employees responded: (The TOP 3)

1. Outsourcing is almost universally available thanks to new deployment models.

Nowadays, there is an entirely new set of technological deployment models at our disposal, opening up flexible and tailor-made options for the use of IT outsourcing services. Said broad offer moved 47.7 % of respondents to outsource their IT.

2. New technologies demand managed services and IT outsourcing.

When asked about their motive for outsourcing, 45.1 % declared they lacked the internal resources needed to introduce new technologies.

3. Forty-two percent need managed services in order to meet increasing IT demands.

According to 42.1 % of respondents, the continuous IT transformation significantly influenced their decision.

Source: Study by Comarch and IDC, September 2018

A list of all the different outsourcing motives given shows that the factors of cost and time as well as a lack of know-how and technology are also common reasons for enterprises to outsource.

  • New deployment models have become available (e.g. on demand, managed services, cloud computing) - 47.4 %
  • We lacked the resources for new technologies (e.g. cloud computing, AI/ML, VR/AR) - 45.1 %
  • Increasing IT demands in different lines of business - 42.1 %
  • Cost reduction – external services were more cost-effective - 38.4 %
  • Time to market – external providers were able to render their services faster - 32.3 %
  • Our internal resources did not suffice to cover all IT demands - 27.8 %
  • We did not have the knowledge and the skills needed to provide certain services - 24.8 %
  • Matters of security – external providers offered higher security standards - 19.6 %
  • Outsourcing is part of our IT strategy - 14.3 %
  • Other reasons – 2.3 %

New deployment models have made outsourcing widely available to 47 % of respondents

Nowadays, there is a whole new set of technological deployment models is at our disposal, enabling flexible and tailor-made options for the use of IT outsourcing services. Nearly half of the major enterprises surveyed stated that said fact was the main reason behind their decision to outsource. The new deployment models include, among others, on premise, managed services, and cloud computing. Said broad offer moved 47.7 % of respondents to outsource their IT.

Forty-five percent need managed services and IT outsourcing in order to implement new technologies

The wide variety of delivery models is closely followed by new technologies on the list of the top three outsourcing motives. When asked about their reasons for outsourcing, 45.1 % declared they lacked the internal resources needed to introduce new technologies. In fact, many of the German, French, UK and Benelux companies wanting to introduce cloud computing, artificial intelligence, machine learning, augmented reality, and virtual reality quickly reached the limits of what their internal IT could achieve in that respect. What makes that aspect particularly interesting is that it provides proof of how closely a company's business development is tied to its technological capabilities.

Forty-two percent need managed services in order to meet increasing IT requirements

According to 42.1 % of respondents, the continuous IT transformation significantly influenced their decision as with it, the IT-related demands of customers, partners, suppliers, service providers, and employees keep increasing.

Reducing costs, shortening the time to market, and tapping external know-how

A list of all the different outsourcing motives given shows that the factors of cost and time as well as a lack of expertise and technology are also common motives for outsourcing.

One hundred and thirty companies on IT outsourcing

In a large-scale analysis, IDC and Comarch found out why, how, where, and when those 130 top enterprises do their outsourcing and what their experiences have been. You will find the answers to all these questions in our recently published whitepaper.

https://www.comarch.com/trade-and-services/resources/outsourcing-trends-in-western-europe/

About Comarch ICT

Comarch ICT combines qualified IT experts with many years of experience in the field of ICT and appropriate technological resources. Moreover, the Comarch Group maintains partnerships with different hardware and software producers worldwide and, as a result, is highly certified and specialized. A full service provider for IT, Comarch's ICT department offers IT infrastructure solutions, cloud services, hosting and outsourcing services, as well as a wide range of services pertaining to the implementation and integration of software solutions. The provider's comprehensive managed services for IBM Power Systems completes their service portfolio. Companies such as Hermes, Valeo, Thomas Cook, or ESO have placed their trust in Comarch ICT.

For more information, please visit: ict.comarch.com

About Comarch

Comarch is an international supplier of IT solutions (such as ERP, E-Invoicing, IoT, ICT, Financials, and cloud solutions among many others) for small and medium-sized companies, banks, insurance companies, telecoms and healthcare providers. The company has more than 6,000 employees working in numerous countries across the world. Thanks to major investments in research and development, Comarch is able to offer a wide range of innovative IT solutions that rate high with both customers and analysts.

Author: Dr. Ewelina Szajda-Birnfeld, Business Development Manager

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