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30 October 2012 | Adam Leach

Outsourcing of back office functions will increase over the next six months as companies respond to improving economic conditions, according to KPMG.

In its latest quarterly report on the outsourcing industry, the accountancy firm found that over half (59 per cent) of outsourcing firms surveyed expect customer demand to increase. The figure is a marked rise on the last study, which found 51 per cent expected a rise.

Shamus Rae, a partner and head of the Shared Services and Outsourcing Advisory team at KPMG, said: “It is encouraging to see that suppliers are more bullish about business prospects then they have been for some time, but while we are not exactly in recession, we are not quite celebrating a recovery either.”

The study found the area most likely to be outsourced is IT, with 65 per cent of respondents identifying it. Transactional back-office services for finance and accounting, and HR and customer teams were identified by 36 per cent and just under 20 per cent respectively as contenders for outsourcing.  

And while previous editions of the quarterly report have identified a trend in offshoring, the tide appears to be shifting: the latest study found that 45 per cent have increased domestic outsourcing operations.

Despite the outlook for the next three months, respondents also struck a cautious note, with many reporting a challenging third quarter and concerns that customers will not renew contracts.