Board directors at leading firms increasingly reliant on outsourcers despite concerns – Study

• Almost all board directors will increase the level of outsourced services they use
• But one in 10 warn service levels are poor or average and outsourcers are not delivering on problem solving
• Nearly half will look to consolidate services with one partner or cut back on number of outsourcing partners

Board directors at leading firms are increasingly reliant on outsourcing key services and the trend is set to accelerate over the next three years, new research* from Ocorian, a market leader in regulation and compliance services for funds, corporates, capital markets and private clients.

RELATED: Inside or outside? The strategic value of outsourcing in 2024

Almost all (98%) board directors of companies with an annual turnover of over $250 million questioned in Ocorian’s international study plan to increase the level of outsourcing at their organisation over the next three years with nearly two out of five (37%) planning to increase the level of outsourcing by between 25% and 50%.

That builds on strong expansion in the past two years with 94% of board directors reporting a rise in the level of outsourcing. One key area for investment was regulation and compliance with 84% of directors saying budgets for those outsourced services had increased in the past two years.

However, the study found some dissatisfaction with the services provided by outsourcers with 12% saying the level of service is average and 18% saying outsourcers are average or poor at solving complex business problems for them.

Key criticisms include a limited scope of service, technology issues and level of expertise.  Some survey respondents complained about the responsiveness of outsourcers.

Criticisms of the services provided help explain a shift away from relying on a range of providers – 59% questioned say they expect their organisation use a wider range of outsourcing partners. By contrast 25% plan to consolidate to one partner or a smaller number of partners and 10% plan to switch from their current provider.

Almost all (55%) questioned say it is very important their provider offers a wide range of services while 37% say it is quite important.

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at Ocorian said: “Outsourcing of services is clearly already very important to board directors and set to grow in importance over the next three years with almost all firms planning to increase their level of outsourcing.

“Business operations are very much reliant on the expert support of third-party providers but there are issues companies need to address if they are to become successful partners.

“There are significant numbers of directors who are unimpressed with the service they receive and quite often on basic issues such as expertise. That should put pressure on outsourcers to improve and expand their service offering as there is a growing preference for consolidation.”

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The table below shows the predicted increase in the level of outsourcing over the next three years among board directors.