Outcome-based outsourcing now dominates talent strategies: Deloitte

LONDON, UNITED KINGDOM — The outsourcing industry has reached a tipping point, with 67% of organizations now prioritizing business outcomes over cost savings in vendor relationships, according to a Deloitte survey.

Death of cost-centric outsourcing

The Global Outsourcing Survey 2024 gathered insights from more than 500 global business and technology
leaders, including more than 150 C-suite executives across industries. It revealed that 34% of companies prioritized cost reduction today, from 70% in 2020.

Moreover, 42% now cite access to specialized talent as their top driver, while 35% seek to meet the escalating demands of their customers. This shift is most evident in front-office functions, where marketing outsourcing has grown by 10% since 2022, while research and development outsourcing has increased by 8%.

Outcome-based models are delivering results. Among firms using managed or operated services, 88% report satisfaction, compared to 71% for traditional approaches. 

Extended workforce dilemma

Modern enterprises now manage a complex web of talent sources: 96% use third-party outsourcing, 78% operate Global In-House Centers (GICs), and 28% leverage freelancers or crowdsourcing. 

Yet, only 17% have cohesive strategies that span multiple workforce types, creating integration headaches. The most common pain points include benefit tracking and change management.

The solution lies in governance overhaul. Companies with mature Vendor Management Offices (VMOs) achieve 20% or more cost savings, but 70% admit their VMOs aren’t fully developed. 

Deloitte proposes transforming VMOs into Extended Workforce Management Offices (EWMOs) with broader oversight. An EWMO doesn’t just manage vendors, it orchestrates the entire talent ecosystem. 

“Effective vendor management plays a crucial role in the success of our outsourcing programs, reflecting the specialized nature of vendor management capabilities to enhance agility and responsiveness, allowing our organization to optimize its operational efficiency while adapting to evolving market demands,” said the Managing Director and India GIC lead of a global multi-brand restaurant company.

Roadmap for manpower transformation

In an era where workforce strategy defines competitive advantage, organizations must pivot from traditional cost-cutting to agile, value-driven transformation, or risk falling irreversibly behind.

Thus, it is significant to focus on these key areas to accelerate companies progress and improve their service for the public:

• AI integration
• Contract innovation
• GIC optimization
• EWMO implementation

As Deloitte’s data shows, the gap between leaders and laggards is widening, with workforce agility becoming the ultimate differentiator.