What trends influencing the IT outsourcing market this 2017 ?
zyra kate
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I had come across an interesting article online regarding Outsourcing, hence, I would like to share them with everybody, Please comment your responses to this article.
8 key trends influencing the IT outsourcing market in 2017:
A survey conducted by Computer Economics on IT Outsourcing found that outsourcing is becoming an attractive option for smaller organizations and application development is the most outsourced function. It also found that outsourcing of IT security is increasing rapidly - compared to other outsourced functions. These trends can be primarily attributed to the growing availability of cost effective and scalable solutions in the cloud computing, robotic automation, and managed services solutions space.
In terms of preferred geographical location for outsourcing, The Economic Times recently reported that 75% of Multi-National companies (MNCs) in a survey chose India due to its buoyant economy, progress in enacting regulatory reforms and growing talent pool. While outsourcing was used as a cost cutting tool, the rationale is undergoing a perceptible change. Businesses are increasingly considering outsourcing as a cost-effective solution to draw top talent.
Here is a list of what is on the radar for IT outsourcing to help you chart your outsourcing strategy for 2017.
1.Data security: Data leakage and privacy issues plague the digital world, and in response, companies are looking to improve their data security with their existing IT vendors or seeking specialized security vendors to outsource this function.
2.Value generation: As strategic focus of outsourcing shifts from costs and relationship management continues to improve, companies are pursuing partnerships with vendors that add business value by spurring innovation.
3.Quality enhancement: Cost reduction is still important to companies that outsource but surveys indicate that innovation is being used to generate more quality - rather than exploring ways to lower cost of delivery.
4.Automation: With advancing robotics technology that can easily replicate human effort to execute tasks or analyse millions of data points, businesses are looking for vendors who can provide the sought-after automation to reduce human resource costs. As a result, the number of virtual employees is expected to go up
5.Single vendor model: Outsourcing to multiple vendors still happens. However, this model does not optimize quality of service, efficiency and costs as much as a single managed services provider who can cater to all IT functions. The result? The multiple vendor set up could be on its way out.
6.Agility: IT requirements are never set in stone and need to evolve as new market demands emerge. Companies outsourcing IT expect their vendors to follow agile methodologies to remain responsive and deliver scalable solutions that will allow for seamless integration of new features.
7.Mergers and Acquisitions: As competition increases among service providers, companies with smaller offerings are merging with the bigger players in the market. Outsourcing is also driving M&A among companies that recognize the tangible benefits of having outsourced IT functions.
8.Responsible outsourcing: Sustainability and green initiatives are resonating with consumers and business across the world. In keeping with this, companies are collaborating with IT vendors who have an established reputation of being responsive and responsible towards the natural and social environment in which they operate.
Currently, the biggest uncertainty that is weighing on the outsourcing market is the US administration’s immigration policies. Its impact on the US market and the rest of the world remains to be seen as the policies take effect. The other unsettling event in the equation is Brexit, which too leaves UK’s economy and that of Europe’s in question. The fall out of these important events could alter the course of the trends shaping the outsourcing industry in 2017. Only time will tell
8 key trends influencing the IT outsourcing market in 2017:
A survey conducted by Computer Economics on IT Outsourcing found that outsourcing is becoming an attractive option for smaller organizations and application development is the most outsourced function. It also found that outsourcing of IT security is increasing rapidly - compared to other outsourced functions. These trends can be primarily attributed to the growing availability of cost effective and scalable solutions in the cloud computing, robotic automation, and managed services solutions space.
In terms of preferred geographical location for outsourcing, The Economic Times recently reported that 75% of Multi-National companies (MNCs) in a survey chose India due to its buoyant economy, progress in enacting regulatory reforms and growing talent pool. While outsourcing was used as a cost cutting tool, the rationale is undergoing a perceptible change. Businesses are increasingly considering outsourcing as a cost-effective solution to draw top talent.
Here is a list of what is on the radar for IT outsourcing to help you chart your outsourcing strategy for 2017.
1.Data security: Data leakage and privacy issues plague the digital world, and in response, companies are looking to improve their data security with their existing IT vendors or seeking specialized security vendors to outsource this function.
2.Value generation: As strategic focus of outsourcing shifts from costs and relationship management continues to improve, companies are pursuing partnerships with vendors that add business value by spurring innovation.
3.Quality enhancement: Cost reduction is still important to companies that outsource but surveys indicate that innovation is being used to generate more quality - rather than exploring ways to lower cost of delivery.
4.Automation: With advancing robotics technology that can easily replicate human effort to execute tasks or analyse millions of data points, businesses are looking for vendors who can provide the sought-after automation to reduce human resource costs. As a result, the number of virtual employees is expected to go up
5.Single vendor model: Outsourcing to multiple vendors still happens. However, this model does not optimize quality of service, efficiency and costs as much as a single managed services provider who can cater to all IT functions. The result? The multiple vendor set up could be on its way out.
6.Agility: IT requirements are never set in stone and need to evolve as new market demands emerge. Companies outsourcing IT expect their vendors to follow agile methodologies to remain responsive and deliver scalable solutions that will allow for seamless integration of new features.
7.Mergers and Acquisitions: As competition increases among service providers, companies with smaller offerings are merging with the bigger players in the market. Outsourcing is also driving M&A among companies that recognize the tangible benefits of having outsourced IT functions.
8.Responsible outsourcing: Sustainability and green initiatives are resonating with consumers and business across the world. In keeping with this, companies are collaborating with IT vendors who have an established reputation of being responsive and responsible towards the natural and social environment in which they operate.
Currently, the biggest uncertainty that is weighing on the outsourcing market is the US administration’s immigration policies. Its impact on the US market and the rest of the world remains to be seen as the policies take effect. The other unsettling event in the equation is Brexit, which too leaves UK’s economy and that of Europe’s in question. The fall out of these important events could alter the course of the trends shaping the outsourcing industry in 2017. Only time will tell
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Comments
> Great article! Yes outsourcing matters more not only in IT industry generally in all industry whenever they are not having time or particularly they are in lack of that resource.
Thank you so much. I totally agree with you. Every Industry’s businesses can be Outsourced, but it depends on what function of their business they are willing to outsource.
The most commonly outsourced functions of a business are :
IT Outsourcing
Legal Outsourcing
Content Development
Web design and Maintenance
Recruitment
Logistics
Manufacturing
Customer support
Outsourcing a business function can have both pros & cons.
The Pros of Outsourcing -
Swiftness and Expertise:
When a company outsources, it is outsourced to an experts & specialists in that field.
Concentrating on core process rather than the supporting ones:
Like customer support, making sure the feedback are reverted for improving the quality.
Risk-sharing:
This is highly crucial, since the outsourced vendor is a specialist, they plan your risk-mitigating factors better.
Reduced Operational and Recruitment costs:
Recruitment & training is a big deal to companies, recruitment and operational costs can be minimized to a great extent. This is one of the prime advantages of offshore outsourcing
The Cons of Outsourcing -
Risk of exposing confidential data:
When an organization outsources HR, Payroll and Recruitment services, it involves a risk if exposing confidential company information to a third-party
Synchronizing the Deliverable:
In case you do not choose a right partner for outsourcing, some of the common problem areas include stretched delivery time frames, sub-standard quality output and inappropriate categorization of responsibilities. At times it is easier to regulate these factors inside an organization rather than with an outsourced partner
Hidden costs:
Although outsourcing most of the times is cost-effective at times the hidden costs involved in signing a contract while signing a contract across international boundaries may pose a serious threat
It seems like there are a lot more pros to IT Outsourcing then cons but it depends on your business. If you have a lot of very specific business apps that require skill sets that it'd be difficult to find in one provider it probably makes sense to keep hiring in-house. If you just need your systems to run and keep everything secure and up to date, it makes more sense to partner with a company tha
Resolute Technology Solutions
IT Consulting | IT Managed Services
Thank you for sharing such a valuable information with us.