Shared services and outsourcing models are driven by, amongst others, cost savings as well as the need to improve global delivery and operating models and support business growth agendas. Opportunities within the African continent are contributing to the need to improve delivery models and support growth agendas. These are some of the insights suggested by KPMG’s latest Q3&4 2012 South African Sourcing Pulse Survey.
At KPMG’s breakfast event held at the firm’s Johannesburg office on 16 April 2013, experts in business and IT service sourcing provided keen insights based on the findings of the latest survey that has captured the changes in demand, usage levels, future adoption plans and related key market indicators for 2013 across all sectors.
Since its inception in 2004, KPMG’s Global Sourcing Advisory Pulse Survey has yielded insightful analyses of current and ongoing market trends in the use, deployment and delivery of business and IT services. However, trends in South Africa differ when compared with more developed global markets and for this reason, KPMG releases a South African Sourcing Pulse Survey on a bi-annual basis.
Insights are gleaned from KPMG firms’ advisors who work closely with end-user organisations that are actively exploring or undertaking domestic, near and offshore shared services and outsourcing, and other service delivery initiatives, as well as leading global business and IT service providers.
Speaking at the breakfast, Fritz Dannhauser, Associate Director, KPMG Shared Services and Outsourcing Advisory, noted that the main driver for organisations for improving their global business services support is reducing operational cost.
“Organisations are however not pursuing this goal unilaterally. Rather, reducing costs has become a base-level prerequisite for improvement or expansion efforts,” says Dannhauser.
“The top approaches South African organisations are employing to improve service delivery performance and help to reduce costs are internal process improvement and the use and expansion of shared services. The use and expansion of BPOs and ITOs is not as popular yet, but we believe that, as the market develops, their popularity could pick up – a trend we will monitor closely,” adds Dannhauser.
The survey highlights that the key success factors for shared services within SA are running it as a business and delivering quality service.
“This finding is consistent with what we see in the market,” notes Alida Taylor, Director, KPMG Shared Services and Outsourcing Advisory.
Vandana Ramani, Associate Director, KPMG Shared Services and Outsourcing Advisory, adds, “A key point of failure for shared services, as highlighted in the survey, is being competitive with third-party service providers. Building a capability internally and being as competitive as a service provider is challenging.”
Taylor concurs, “Service providers have programmes to develop skills, especially global players who have the platform to upscale, a capability that could potentially be leveraged to create new or alternative job opportunities for company employees.”
78 percent of South African service providers indicate that market pricing pressure is increasing. 89 percent of providers, however, expect to be able to increase the scope of work they are delivering on existing contracts.
Respondents indicated that the key capability critical for success for 2013 initiatives is smart, innovative management ‒ a trend consistent with KPMG’s global pulse survey.