May 2019 – IT outsourcing has long been an important tool for insurer IT leaders who need to meet increasing business demands. Outsourcing can be an effective way to staff transformational projects and meet capacity needs, but it’s neither a silver bullet nor a simple process.

Strong relationship management is a crucial success factor for any outsourcing engagement. Insurers are advised to take care when managing their relationships with outsourcing partners. This report presents data from a recent study of 71 insurers on their utilization, plans, challenges, and goals.

Topics Covered

• Outsourcing utilization and drivers. Benchmarking information for insurers.
• Future outsourcing plans and reasons for change, including whether original drivers continue to obtain.
• Managing the outsourcing relationship. Key satisfaction and self-assessment metrics.

Key Points and Findings

• Insurers outsource 25%-30% of their IT teams on average. Specific levels vary from 0% to as much as 90% as strategic business needs dictate.
• Cost is not the key driver unless outsourcing is a long-term strategy. Most insurers outsource to meet skills or capacity needs for critical transformation projects or rapid business growth.
• Project management is the key. Insurers are least satisfied with their partners’ (and their own) project management abilities, which can decrease overall value of the relationship.