DEBUG: PAGE=domain, TITLE=NelsonHall Blog,ID=1469,TEMPLATE=blog
toggle expanded view
  • NelsonHall Blog

    We publish lots of information and analyst insights on our blogs. Here you can find the aggregated posts across all NelsonHall program blogs and much more.

  • Events & Webinars

    Keep up to date regarding some of the many upcoming events that NelsonHall participates in and also runs.

    Take the opportunity to join/attend in order to meet and discover live what makes NelsonHall a leading analyst firm in the industry.


Subscribe to blogs & alerts:

manage email alerts using the form below, in order to be notified via email whenever we publish new content:

Search research content:

Access our analyst expertise:

Only NelsonHall clients who are logged in have access to our analysts and advisors for their expert advice and opinion.

To find out more about how NelsonHall's analysts and sourcing advisors can assist you with your strategy and engagements, please contact our sales department here.

Increased Adoption of Platform-Based Services and Emergence of DevOps within Resurgent SAP Outsourcing Point to Increasing Sophistication of U.K. Outsourcing Market

go to blog home

Search posts by keywords:

Filter posts by author:

Analysis of NelsonHall’s U.K. outsourcing contracts for 2014 shows that outsourcing is becoming more sophisticated in a number of key areas across both service delivery and contracting. Within service delivery:

  • The role of Cloud was increasingly evident with for example the first HR BPO contracts based on Workday software emerging in BPO and IaaS contracts in support of SMEs becoming commonplace
  • DevOps also began to appear, particularly in support of transformational IT outsourcing contracts where application re-engineering is starting to be combined with simultaneous cloud-based IT infrastructure adoption
  • Within front-office services such as customer management services, multi-channel service delivery is now the norm with web chat and even social media channels commonplace.

The public sector remains at the forefront in driving more sophisticated commercial arrangements in the U.K., increasingly protecting themselves from administrative over-payments, flexing payments to adjust to levels of transactional activity, using third-party investment to drive transformation, and sharing access to contracts via framework agreements.

Starting with BPO, the rise in sophistication in HR outsourcing is demonstrated by:

  • The emergence of the first U.K. HR outsourcing contracts involving the implementation of the Workday HR SaaS platform and integration of proprietary payroll services with Workday. This software facilitates organizations in managing their global workforces and providing consistent employee and manager self-service via a single standardized platform across business units and geographies
  • The increasing inclusion of RPO within multi-process HR outsourcing contracts. Multi-process HR outsourcing contracts in the U.K. in recent years had typically reverted to just payroll services and employee administration. However, 2014 saw talent management functions led by RPO once again starting to be included within wider HR outsourcing contracts
  • Within standalone RPO, the increasing use of employer branding and the increasing dominance of social media channels such as LinkedIn and twitter rather than recruitment agencies for candidate attraction
  • The increasing sophistication of occupational health services with for example incorporation of multishore delivery including use of onshore medics combined with use of web-based health surveillance software in the provision of occupational health services in support of a North Sea drilling company
  • The increasing use of benefits portals both for cross-country benefits administration and also in support of employee selection of flexible benefits.

The increasing sophistication of customer management outsourcing is demonstrated by the increasing adoption of multi-channel delivery. Whereas relatively recently contact center outsourcing contracts in the U.K. were typically for voice only services, in 2014 it was the norm for customer management services contracts to be multi-channel in nature, with email, web chat, and even social media support commonplace. This was true across both the private and public sectors, with the e-government initiative ensuring that all local government customer services contracts announced were widely multi-channel in nature. At the same time, the move to digital is leading to the emergence of marketing BPO services with the provision of onshore creative design services becoming more commonplace.

U.K. organizations are continuing to adopt procurement outsourcing services as the pressure on costs continues. While procurement outsourcing remains concentrated around indirect procurement categories, it has expanded in scope to place increasing emphases on supplier relationship management and supplier and procurement performance management.

Within industry-specific BPO, the financial services and government sectors have been the mainstay of the U.K. outsourcing industry for many years. Here in 2014 there was an increasingly emphasis on platform-based services, such as within the major mortgage BPO contract awarded by the Co-operative Bank and within policy administration contracts in the insurance sector.

Within local government, the emphasis on local job creation continues to be a major feature of contracts outside London. However, in 2014 London authorities were increasingly adopting service delivery from outside London, typically from the North-East. Regardless of region, local authorities were becoming more sophisticated in their commercial approaches, including for example protecting themselves from administrative over-payments and flexing payments to adjust based on levels of transactional activity. Supplier investment is also increasingly being leveraged to fund transformations that will reduce service costs. Transformation to achieve ongoing and significant cost reduction remains even more firmly on the agenda.

Within IT outsourcing, use of both Cloud and DevOps became more prevalent during 2014.

IT infrastructure outsourcing contracts are increasingly being based around private and hybrid cloud transformation, with notable examples of adoption by WPP, in support of the increasing digitization of their business, Amey, and Unipart Automotive.

At the same time, the level of adoption of IT infrastructure management was at a 4-year high within local government in 2014, with migrations to cloud-based infrastructure also beginning to take place in this sector. As in BPO, the commercial management of these local government IT infrastructure management contracts was also showing increased maturity, with contracts continuing to include local job creation, apprenticeships, and training initiatives but also including the option to purchase services on behalf of additional public sector entities such as the emergency, education, and health services. Framework contracts were also evident in the purchasing of network management services by regional public sector groupings.

Mobile–enabling of apps also continued to gather pace in both the public and private sectors.

In the SME sector, particularly in high-tech businesses the adoption of Infrastructure-as-a-Service (IaaS) contracts is accelerating as SMEs take advantage of the speed-to-market and scalability of third-party cloud infrastructure. Elsewhere SaaS continued to be adopted in support of non-core and specialist processes such as CRM, laboratory information and housing management.

Elsewhere in IT infrastructure management, end-user workplace contracts continued apace with these contracts frequently now including tablets and thin clients in infrastructure refreshes, and with email and office applications increasingly being provided via the Cloud.

Within application management, SAP application management was noticeably back in fashion during 2014. While IT outsourcing in the U.K. typically remains unbundled with separate contracts and suppliers used for application management and IT infrastructure management, these SAP outsourcing contracts are increasingly going beyond standard application maintenance to combine application re-engineering with infrastructure re-engineering, with, for example, a number of these contracts in 2014 including upgrading of SAP systems and also providing SAP hosting using private cloud infrastructures. U.K. companies are typically not yet ready to use public cloud for core applications such as SAP, but they are increasingly adopting third-party private cloud implementation and hosting in conjunction with SAP application management. These contracts potentially mark the introduction of DevOps thinking into the U.K. with application and infrastructure transformations starting to be co-ordinated within a single contract within contracts with transformational intent.

So what does this mean for 2015? On the whole, more of the same. Most of the trends described above are at early stages of development. For example in cloud, core systems typically need to complete their migration to private cloud from where they will increasingly incorporate elements of hybrid cloud. At the same time, the role of cloud-based platforms will continue to rise in importance in non-core areas of BPO extending beyond HR which is currently the prime example.

DevOps will increase in importance, not in support of minor application upgrades and maintenance, but where businesses are transforming their applications, and particularly in support of transformations to digital businesses.

Commercially, the trend to transaction-based and usage based pricing will continue, with this continuing to be supplemented by gainshare based on supplier investment, particularly by organizations such as those in the public sector that have a strong need for cost reduction but lack the means to finance the required process and IT transformations themselves.

For further details, see  

No comments yet.

Post a comment to this article: