Rising Anti-Incumbency in Outsourcing: Breaking Up Is Not Hard to Do

17 Oct 2014
by Chirajeet Sengupta, Elizabeth Boudrie, Rajesh Ranjan


As the business process outsourcing (BPO) and IT outsourcing (ITO) markets continue to mature and develop we are seeing a rising rate of non-renewal of outsourcing contracts – a rising anti-incumbency trend. This trend is being driven among buyers by a wide variety of factors, including buyer dissatisfaction with service levels, perceived lack of value beyond cost reduction, contract concerns, and the need to better manage next-generation challenges. Some service providers are furthering this trend, as well, with aggressive moves aimed at encouraging buyers to swap.

Does this trend portend bad news for the outsourcing market? We argue no, it does not. Radical change in outsourcing is inevitable given its rapid evolution, and this anti-incumbency is one of the results of that change. Our research shows that buyers are leaning in to outsourcing, more likely to increase than decrease scope at renewal time (even if they change providers), and at the very least few buyers reverse course and take all work back in-house.

Ultimately, the best way to maximize the value of outsourcing is for both buyers and providers to accept the inevitability of change and work together to craft strategies to navigate its shoals.

In this viewpoint, we look at the genesis and causes of anti-incumbency – showing shared responsibility between buyers and providers, its impacts on the industry, and how to harness changes to the industry’s advantage.


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