The Nordic region has seen an increase in enterprise IT outsourcing as traditional industries look for skills and experience in internet of things (IoT) and big data technologies.
As heavy industries adopt IoT technology worldwide and become more data driven, Nordic companies are hiring service providers to fill knowledge gaps, create ecosystems and provide expertise.
Barry Matthews, a partner at ISG, who heads up Northern Europe, said traditional IT outsourcing, where an organisation pays people to provide a service, grew by 17% in the Nordics in 2019, compared with 2018. In Europe as a whole, spending on IT outsourcing increased by 10% last year, compared with 2018. ISG said this growth was a result of organisations’ need to reduce costs while continuing to transform digitally.
ISG also found that in Europe, cloud-based services accounted for 37% of IT outsourcing. In the Nordics, cloud-based services made up 35% of contract value, compared with 20% three years ago. ISG monitors IT and business process services contracts in Europe, the Middle East and Africa (EMEA) that are worth over €5bn (£4.2bn).
“Part of the Nordic growth is a lot of focus on IoT. There are a lot of manufacturers and telcos in the Nordics that are very progressive, and they are making sure the right ecosystems and connectivity are in place to use the IoT,” said Matthews.
In the region, heavy industries such as machine, lift, crane and car manufacturing, as well as shipping, are adopting what is known as the industrial internet of things (IIoT).
Swedish outdoor power tool maker Husqvarna is one example. The company uses IoT as part of its strategy to offer services on top of product sales. For example, its connected lawnmower service, part of its Gardena Smart System, harnesses the IoT. Gardeners can get a real-time overview of their garden through a smartphone or tablet app that enables them to control and configure all their connected devices, even when they are on the move.
Meanwhile, in shipping, Danish giant Maersk uses the IoT as part of systems to offer insight into the movement of goods without the need for humans to log information.
Connected to the IoT acceleration is increased outsourcing for data skills in the Nordics. “We are seeing a focus on big data technology in Nordic heavy industry,” said Matthews. “They are putting sensors into machines and are collecting data. As a result, there is more outsourcing as they seek the analytics skills they need to interpret what the data means.”
Matthews said this was an example of organisational redesign, which is common among manufacturers in the Nordics as they transform digitally. “If you have a big Swedish company where staff have been building stuff for years, and suddenly make it a data company, you need outside help to transition,” he added.
