Why business leaders are adopting outsourced solutions to support their companies to achieve their strategic objectives
By Ray Stenton, Managing Partner at NorthEdge
The UK business services sector has shown remarkable resistance as it grapples with the intricate macroeconomic challenges which are present across the industry, with fluctuating exchange rates, geopolitical uncertainties, and supply chain disruptions to name a few. Meanwhile, inflationary pressures, rising interest rates, and the aftermath of the pandemic compound issues.
Despite global deal activity in the sector decreasing during 2022, after record highs the year before, aggregate deal values have increased by 26% since, while the average deal size nearly doubled over the same period.
This surge can be attributed to a flight towards high-quality businesses that have demonstrated resilience and maintained profitability despite global macroeconomic challenges.
Outsourcing for success
As businesses continue to focus on agility, improving efficiencies and cutting costs in response to the current macroeconomic landscape, outsourcing remains an attractive proposition for business leaders who are seeking flexibility, capacity and specialist capabilities.
It is therefore not surprising to see the primary driver for outsourcing expand from cost reduction in 2020 to driving forward new capabilities, delivering digital transformation and target operating model design in 2022.
Businesses are now increasingly turning to third parties for specialist insights – including protecting their businesses, keeping up with technological advances and identifying top-tier talent.
In 2023, the value of the global outsourcing sector is expected to reach $971bn, while 37% of small businesses are already outsourcing at least one business process.
Portfolio Highlight: ICP
ICP is a global marketing services consultancy headquartered in London with offices globally. The business provides digital marketing, digital asset management services, creative production and consultancy services to global brands such as Mars, Unilever, Coca-Cola, Diageo and Warner Bros., supporting them to deliver their increasingly complex multi-channel marketing strategies.
ICP’s proposition allows customers to benefit from a specialist team that oversees and executes the often-challenging aspects of technology use. They offer integrated solutions across Digital Asset Management, Digital Commerce, and Creative Operations to help the world’s top brands unlock the potential of their content and gain a competitive advantage.
ICP operates within an emerging and exciting market, with huge potential for growth and innovation. This is further demonstrated by our support of ICP’s first strategic acquisition of the UK-based Martech and Content Operations consulting firm, Team 6ix, in November. The acquisition builds on what we believe to be the growing momentum of utilising outsourcing to access specialist capabilities, with businesses such as ICP providing talent and expertise for clients that support them to achieve their business objectives.
Outsourcing to support the delivery of strategic objectives
Cybersecurity is another case in point, with businesses looking to utilise outsourcing in a bid to bolster their capabilities in this focus area. According to a recent Deloitte report, cybersecurity continues to be the number one challenge executives face in delivering their strategic objectives.
Reports suggest that by the end of 2023, 65% of the world’s population will have personal data covered under modern privacy regulations. It’s also forecast that by 2025, 60% of organisations will use cyber security risk as a primary determinant in conducting third-party transactions and business engagements.
These stats highlight how the future of cyber and information security is coming into sharper focus as organisations look to integrate cyber risk mitigation and management strategies across the entire business. It’s no longer viewed as simply an IT problem but rather a key factor in supporting strategic business objectives and sustainable growth.
As a result, 81% are turning to specialists to meet their cybersecurity needs. Meanwhile, the report also found that 50% of executives identified talent acquisition as a challenge in delivering strategic priorities, as well as 94% of leaders leveraging third-party support to introduce AI and Machine Learning operations into their businesses.
Given the current macroeconomic backdrop, alongside significant technological advancements, many leaders need to identify solutions to support their businesses to improve efficiencies whilst maintaining adaptability and innovation. We believe businesses that can support leaders to deliver on one or both strategic objectives will be well-positioned for sustainable growth, making it an attractive investment opportunity.
Please note, all reports and statistics mentioned above are available at NorthEdge’s Business Services Report 2023 – https://northedge.com/wp-content/uploads/2023/09/Business-Services-Sector-Report-September-2023.pdf