Disruptive outsourcing leaps to the front. Our 2018 survey of more than 500 executives from leading organizations indicates that disruptive outsourcing solutions—led by cloud and automation—are fundamentally transforming traditional outsourcing. https://deloi.tt/2x7zxb8

1. Traditional outsourcing is dead.
Long live disruptive outsourcing
The Deloitte Global Outsourcing Survey 2018

2. 2018 Global Outsourcing Survey—External Report 2
IntroductionIntroduction
Survey Overview
• Deloitte conducts the biennial global outsourcing
survey to understand the state of the
outsourcing market and to identify trends
• This year, we focused on understanding the
impact of disruptive solutions such as Cloud and
RPA on the outsourcing landscape
Survey Approach
• We surveyed leaders and senior executives from
organizations across multiple industry sectors
and geographies
• We analyzed the responses and normalized
biases in the survey data
• We then drew insights garnered over many years
of experience working with our clients on both
outsourcing and emerging technologies
521
Executives from
leading organizations
Respondent Highlights
86%
Respondents belong
to organizations with
more than $1B in
annual revenue
25
Sectors across
6 industries

3. 2018 Global Outsourcing Survey—External Report 3
Organizations’ annual revenue and employee population size
86% of respondents are from organizations
with greater than $1B in annual revenues
95% of respondents are from organizations
with over 1000 employees
Organizations’ total employee population
18%
20%
21%
36%
5%
100,000 and above
25,000 to less than 100,000
10,000 to less than 25,000
1,000 to less than10,000
Fewer than 1,000
Organizations’ annual revenue (in USD)
14%
23%
22%
18%
23%
More than 25 billion
15-25 billion
5-15 billion
1-5 billion
Less than 1 billion

4. 2018 Global Outsourcing Survey—External Report 4
Organizations’ geographic distribution and industry sector
US, UK, and India were the top countries accounting
for 76% of responses
Organizations’ geographic distribution Primary industry sector of therespondents’
organization
3%
6%
7%
12%
18%
25%
29%
3%
5%
13%
22%
41%United States
United Kingdom
India
Australia
Canada
France
Spain
Switzerland
Germany
Mexico
2%
2%
2%
1%
1%
Technology, Media & Telecommunications
Financial Services
Consumer
Energy, Resources & Industrials
Government & Public Services
Life sciences & Health Care
Others
Technology, Media and Telecommunication, Financial
Services, and Consumer were the top represented sectors

5. 2018 Global Outsourcing Survey—External Report 5
Key Findings
The era of traditional outsourcing is coming to an end; there is a quantum shift towards
adoption of disruptive solutions such as cloud and RPA to enable competitive advantage
Organizations are motivating service providers to innovate rather than just improving
the back office functions
A majority of respondents are adopting cloud with the objective of increasing innovation
and speed to market, and improving performance
A majority of respondents have adopted, or are planning to adopt, RPA. Their key
objectives are to improve performance, increase speed to market, and reduce errors
The most common challenges with adopting disruptive solutions are data migration,
security requirements, application optimization, organizational resistance, highly
fragmented processes, and regulatory compliance

6. 2018 Global Outsourcing Survey—External Report 6
Current and future outsourcing levels
IT continues to be the function most commonly outsourced. A majority of the respondents plan to
maintain their current outsourcing levels or increase them in the future
Percentage of respondents planning to maintain or increase their level ofoutsourcing
IT Finance Procurement
74%
87%
92%
52%
88%
39%
89%
43%
92%
56%
Planning to maintain or increase level of outsourcingCurrently outsourcing
Tax HR

7. 2018 Global Outsourcing Survey—External Report 7
Changes to outsourcing strategy
Change service provider Change outsourcing solution Change both provider andsolution
Percentage of respondents planning to change outsourcing strategy
17%
19%
18%
15%
10%
21%IT
Tax
HR
Finance
Procurement
22%
9%
10%
25%
9%
25%
21%
11%
31%
While the majority of respondents will maintain or increase their current level of outsourcing,
most are also planning to change their service providers or solutions

8. 2018 Global Outsourcing Survey—External Report 8
Motivating service providers to innovate
Organizations are proactively motivating their service providers to innovate by moving additional services to them,
adding innovation terms into their contract, and by rewarding compensation as they innovate. These three
proactive levers saw a 2x increase between 2016 and 2018
How does your organization motivate
service providers to innovate?
Proactive organizations motivate
service providers to innovate by:
21%
71%
8%
Increasing outsourcing provider
compensation as they innovate
Making innovation a key
component of the contract
Moving additional services to the
outsourcing provider as they innovate
Proactive
Via messaging
Wishful thinking

9. 2018 Global Outsourcing Survey—External Report 9
Cloud adoption objectives and cost expectations
What are your objectives for adoptingCloud? What were your expectations for annual
operational costs by moving tothecloud?
38%
50%
35%
51%
54%
56%
63%
64%
Lower cost
35%
32%
23%
6%
3%
Increase
in cost
Decrease in
cost by 0-10%
Decrease in
cost by 11-30%
Decrease in
cost by >50%Improve security
and resilience
Improve speed/
time to market
Improve
performance
Rapid elasticity/
scalability
Access to new
technology
Adopt on-demand
self-service
Catalyst for IT
innovation
Decrease in
cost by 31-50%
Increase in annual operating cost
Decrease in annual operating cost
While organizations expect some reduction in annual operating costs by moving to cloud, only two thirds are
motivated to switch to cloud solely to cut costs. In fact, one third are willing to accept a cost increase if doing
so will allow them to increase innovation and improve speed / time to market

10. 2018 Global Outsourcing Survey—External Report 10
Executives driving cloud adoption
Cloud initiatives are frequently driven by the CIO/CTO, but they are equally driven by the rest of the C-Suite, suggesting
that senior executives see cloud as a means to improve business performance rather than just a technology play
Who is driving cloud initiatives for yourorganization?
CIO/CTO
60%
37%
26%
20%
17%
13%
10%
9%
CEO
Business leadership
CFO
COO
Existing outsourcing provider
Strategic advisor
CHRO

11. 2018 Global Outsourcing Survey—External Report 11
Key concerns and challenges in Cloud service contracting
and implementation
Key challenges to Cloud adoption are similar to traditional outsourcing, including data security,
data migration, and resilience
Top 5 concerns with cloud services contracting
68%Data security
Performance and
resilience
Service provider’s
compliance with laws
and regulations
Loss of intellectual
property
Ability to terminate
without excessive
penalties
58%
56%
Data migration
Security
requirements
Application optimization/
changes (e.g.,
re-platforming, refactoring)
Regulatory compliance
Determine what
to do with existing
infrastructure
Top 5 challenges in implementing a cloudsolution
45%
39%
35%
34%
44%
40%
40%

12. 2018 Global Outsourcing Survey—External Report 12
RPA adoption objectives and satisfaction levels
Objectives for adopting RPA are similar to the objectives for cloud adoption, and satisfaction levels are high across
functions. Decreasing cost is important (cited by 44 percent of respondents) but it is not a primary driver
What are your objectives for adoptingRPA?
59%
53%
52%
51%
49%
44%
42%
41%
35%
12%
62%
Rapid elasticity/
scalability
Mitigate potential
offshoring policy changes
Improve speed/
time to market
Reduce errors
Streamline existing
processes
Access to new
technology/innovation
RPA as catalyst
for innovation
Lower costs
Improve
performance
Focus on core
business
Improve security
and resilience
To what extent is your organization satisfied
with RPA?
5%
77%
81%
78%
74%
77%
73%
3%
4%
4%
6%
6%
IT
Finance
Human
Resources
Legal
Tax
Procurement
Dissatisfied Satisfied

13. 2018 Global Outsourcing Survey—External Report 13
Key concerns and challenges in RPA contracting and adoption
Top 5 concerns with RPA servicescontracting Top 5 risks and challenges with RPAadoption
Organizational
resistance
Highly fragmented
processes
Regulatory constraints
Limitations in technology
landscape and/or
legacy systems
Lack of management
support or awareness
47%
47%
45%
42%
41%
48%
42%
39%
62%Data security
Performance
and resilience
Vendors compliance with
laws and regulations
Loss of intellectual
property
Ability to terminate
without excessive penalties
38%
Key challenges to RPA adoption are similar to traditional outsourcing, including data security,
performance, organizational resistance, and process fragmentation

14. 2018 Global Outsourcing Survey—External Report 14
Cyber risks and controls for outsourcing
Nearly all respondents (95 percent) have cyber risk measures in place. Approximately one-third of organizations
contractually enforce data risk and security protocols with their providers and conduct period evaluations and audits.
Emphasis on periodic evaluations has increased from 28% in 2016 to 34% in 2018, this may be the reason why
respondents are passing audits with fewer material issues
19%
How is your organization addressing cyber risks
when making decisions to outsource?
34%
35%
Contractually enforced
data risk/security protocols
Expect provider to determine
data risk/security protocols
Has your organization’s outsourcing initiativebeen
reviewed by internal/3rd party audits in the last
12 months?
14%
2%
8%
15%
61%
Audit was completed and passed
Organization has not had an
audit in the last 12 months
5%
8%
Conduct periodic evaluations Not focused on cyber risk
Shared data risk/security protocols
Audit was completed and
material issues were identified
Organization does not
know/audit was not completed
Audit was completed and failed

15. 2018 Global Outsourcing Survey—External Report 15
Impact of Service Integration on outsourcing
What value does service integration provide in
managing your multi-vendor environment?
57%
51%
49%
36%
12%
Better performance
management
Improved financial
management
Coordination
between suppliers
and in-house teams
We do not use
service integration
19%
31%
22%
12%
16%
Less than 10%
11% to 20%
21% to 40%
Greater
than 40%
Unknown
How much of your annual cost savings canbe
directly attributed to service integration?
Achievement of
innovation/transformation
objectives
A majority of organizations are using Service Integration to manage their multi-vendor environment
and are able to track back a portion of their annual savings to an effective Service Integration

16. 2018 Global Outsourcing Survey—External Report 16
Impact of outsourcing on Mergers and Acquisitions (M&A)
Overall, there is a significant increase in respondents using outsourcing to enhance M&A efforts —
from 45% in 2016 to 68% in 2018. The most common use of outsourcing in M&A is to reduce the need
for transition service agreements, increase the speed with which the acquired organizations are
integrated, and to lower operating costs
Has your organization used, or explored using, outsourcing to enhance M&Aopportunities?
34%
33%
27%
21%
18%
6%
31%
To reduce need for transition
service agreement
To speed up ability to
integrate new organizations
To lower operating
costs of the target firm
to increase its value
To make organizations
more appealing
for acquisitions
Outsourcing would be an
impediment to M&A activity
Do not consider or associate
outsourcing arrangements
with M&A
To improve the operating
income of divestitures/
increase valuation

17. 2018 Global Outsourcing Survey—External Report 17
Lessons learned from past outsourcing experiences
What will you do differently during your next outsourcinginitiative?
42%
39%
34%
30%
28%
28%
27%
23%
20%
18%
Spend more time in RFPor
service provider selection
Increase scope ofservices
Transform the process
Spend more time in transition
Invest in more robust
service integration
Sole-source the work
Construct a more detailed
service level agreement
Use a competitive
bidding process
Use a third party
strategic advisor
Spend more time
on Agile orDevOps
Four of the top five responses indicate that organizations are looking to change their existing sourcing process and take a
more structured approach. This is unsurprising, since adoption of disruptive solutions needs to be supported by disruptive
sourcing processes, including more innovative service providers, more nimble contracts, and stronger, more advanced
governance

18. 2018 Global Outsourcing Survey—External Report 18
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Deloitte Inc.,
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Lets talk.
Today’s disruptive outsourcing environment is filled with opportunities to enhance innovation and market competitiveness for forward-thinking organizations. If
you would like to learn more about ways these solutions could help your own organization, or to gain deeper insights into how other organizations are using
them already, please contact us. We would be glad to provide you a full briefing.
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