In alignment with the KPMG Global Sourcing Advisory Pulse Survey, the South African edition was launched with an aim to provide insights into trends and projections in local end-user organisations’ usage of shared services, outsourcing, and third-party business and IT services and compare these to global trends.
Increased exposure to change, rapid technological advancements and an increasingly complex global market has made shared services and outsourcing a strategic imperative for businesses around the world.
“Over the last decade, several businesses have openly embraced transformation programmes, effectively leveraging global delivery platforms,” says Alida Taylor, Director, Shared Services and Outsourcing Advisory Practice at KPMG in South Africa. “As part of this study, KPMG sought to understand the extent to which such strategies are being adopted in South Africa.”
The survey revealed that some of the key drivers for improving service delivery capabilities are consistent both globally and in South Africa with an aim to reduce costs and support growth and expansion agendas. “We find this increasingly applicable, as clients look to build capability hubs to support their expansion plans in the larger African continent,” said Vandana Ramani, Associate Director, Shared Services and Outsourcing Advisory Practice at KPMG in South Africa.
Results reveal that South Africa does show a divergence when compared to global results in terms of its propensity to outsource, choosing to seed several of these initiatives in-house first. However, the forward-looking trends in the survey show that the top three areas of demand for outsourced services are in the areas of information technology, bundled business and IT services and vertical specific services.
“Service providers are bullish regarding the South African market in the longer-term,” says Taylor, “both as users of third-party services and as a location from which to deliver services to other markets.”
Asked which sectors showed the most potential in this space, Taylor revealed that banking and financial services; energy and utilities; and oil and gas and manufacturing show the highest levels of demand for shared services and outsourcing arrangements.
The survey also looked at some of the challenges associated with such transformation programmes. The South African market respondents agreed that change management capabilities and the ability to prioritise change programs are clearly the biggest challenges in the local market.
Organisations are also faced with several compliance and regulatory restrictions which in turn require careful planning when embarking on such programmes.
“Although challenges exist,” Taylor concludes, “the convergence of many of these trends leaves us incurably optimistic about the future of transformation levers like shared services and outsourcing in the South African industry landscape.”