On the attractiveness of the UK for outsourcing services

Abstract

Outsourcing has entered what the industry is positioning as a new era of value-added services, innovation and transformation. This means that a shift of emphasis is underway towards skills, sector expertise and business transformation and away from mere technical solutions. Competition between the countries that supply outsourcing services is intensifying as the market moves away from its historic focus on slashing costs and towards providing superior technical and managerial skills, strategic guidance, and operational excellence. So where does the UK stand in all of this? The UK has long been a lucrative outsourcing market in that it is both the world’s second largest consumer of outsourcing services and a major hub for global ITO and BPO vendors that want to sell services into Europe, including into the UK itself. However, the global shift away from low-cost solutions and towards higher value professional services is also enabling the UK to position itself as a global provider of outsourcing services and not just as a customer for them. In this new environment, and despite its high cost base, the UK may be well positioned to capitalise on this shift in focus, given the high level of business and managerial skills that it offers and also given its proximity, in many senses, to the massive US market. In this article, we explore the attractiveness of the UK, as an example of a Western economy, for outsourcing services.