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The evolution of Internet services has blessed humans to make its maximum use in improving their life. This applies in a number of ways like easy communication, knowledge gain or for other, specific business purposes. Exponential rise in revenues for companies like Amazon, Google, Uber etc in the past by utilizing IT is very commendable. Similarly, Startups and SME’s should learn from the success of these companies and try to minimize their potential for failure in future. Recently, there have been and there still are ongoing radical transformations in Outsourcing Services. Examples are cloud based technologies and SaaS tools that help organizations in improving their productivity by decreasing the overall time and cost of maintenance of old IT infrastructure. This has becoming visible due to successful partnerships with IT Service providers or Software Development Outsourcing in simpler terms.

Today’s Outsourcing needs to comprise more than just Cost Savings!

A rise of IT Automation into the business Outsourcing Services especially in BPO (Business Process Outsourcing) has caused a decline in customer service jobs in countries like India or South Africa etc. Though customer service is only a certain part of entire Outsourcing Industry globally, the practice of offshoring technically higher skilled jobs has not decreased. Companies still look to hire providers or partners for scaling up their business services by a focus on increasing their productivity along with saving time and costs. Saving time and cost arbitrage alone in Outsourcing is a thing of the past.

Over more than a decade, we have seen a tremendous rise in IT Outsourcing Consultants both domestically as well as internationally, who help customers worldwide to find fitting offshore/nearshore providers with staff of considerably lower salaries compared to their own country. This trend had led to an era of emergence of many global players, as IT Sourcing Consultants or Vendor Governance Organizations. These 3rd party consultancies have now become a hub of excellence in Outsourcing Services. It was all sunny for those consultants until two things emerged. First, the customers get more experienced themselves and second, the Digital Disruption is also emerging in IT Sourcing Advisory.

How Digital Disruption is changing the face of IT Sourcing market in Future

Online Tools by pliXos Sirion Labs for Sourcing Life Cycle
Fig 1: The online tools by pliXos and SirionLabs cover the entire Sourcing Lifecycle

Digital Disruption, Automation, Artificial Intelligence, Robotic Process Automation and of course the political effect in some countries on immigration laws have impacted the business of some Outsourcing Consulting giants like Wipro, infosys, etc. A gradual shift from traditional IT Offshoring merely for labour cost arbitrage to value driven Offshoring for highly skilled jobs and excellent IT Services is on rise. So, Outsourcing has not died out but has rejuvenated itself and taken a rebirth in the light of latest technological upgrades.

Customers are now switching to cloud services and online tools to meet their Outsourcing requirements. A recent update from the Arvato Outsourcing Index revealed that Outsourcing Contracts have soared to a three years high of £4.93 billion in private sector in UK IT market. This is a clear indication that UK Outsourcing Industry is expected to grow more in future and companies will be evaluating Outsourcing services even further. pliXos also agrees with an article by Raconteur on the “The digital evolution of outsourcing” which gives the strata of IT Outsourcing in UK. The article says that 64 percent of UK companies are looking up to Outsourcing as a means of Business Transformation.

For this reason they are considering IT as tool for increasing revenues in near future. As customers have learnt from their past mistakes it is very obvious that they will look for better services rather than just cost arbitrage. Customers will often choose to online solutions for business management, provider reputation evaluation, experience and other competitive factors for quicker results. In this way the customers will minimize the risks for future discrepancies.

Though many software service providers have improved their services and learnt from their past mistakes, there is still need for a platform which allows transparency and automation in certain stages of software/IT Outsourcing along with just searching right provider. That is especially true for the case of small and medium sized enterprises. This concept has been developed and implemented by pliXos in the form of a B2B Marketplace dedicated to SW development services.

The pliXos B2B Marketplace is totally based on the fact that 73 percent of UK’s Outsourcing industry comprises of ITO (Information Technology Outsourcing) which is expected to grow in volume. By this we can say that the involvement of 3rd party or vendor management organizations could be reduced in future by automation and a transparent platform or marketplace will become a more powerful asset in Outsourcing market.

451 research states “A majority of businesses are now on-board the digital economy express, but skills, expertise, and partners are lacking, resulting in a key role for service providers in future digital transformation projects”.

Digital Transformation Landscape for Business Transformation by 451 research 480
Fig 2: Digital Transformation landscape for Business Transformation by 451 Research

REASON WHY IT OUTSOURCING MARKET EXPANDED EXPONENTIALLY ALL OVER

The IT Outsourcing industry has seen exponential expansion not just because of customer service jobs creation at low cost offshore countries, but because it is dominated by tech. Increased demand for highly skilled IT professionals and the rise of digital disruption are key reasons why it is becoming important for companies to scale by choosing the best developers or software service providers at the same time. Service providers truly are an integral part of the customer’s organization and so should be selected wisely.

Also, instead of contractual business with service providers, companies should look for efficient partners who will understand their business objectives clearly and deliver the best for them. In UK, it is being observed that companies of all sizes are interested more in the providers that show agility, flexibility and at the same time allows the customers to concentrate on their high value core competencies. No company wants to perform bad in business, hence they look for better partners or software service providers to stay on top of their technological frontier and to have even greater market share.

Not only this, even back office Outsourcing is considered as a value addition to core business rather than just cost cuttings. In 2017 UK companies have spent £1.80 billion on BPM deals, representing 26 per cent of all outsourced services. A report from KPMG and Harvey Nash on Business Processes Outsourcing 2017 reveals the most in demand IT Functions that are outsourced maximum.

Most Outsourced IT Function y KPMG Harvey Nash 2017
Fig 3: Most key demand Outsourced IT Functions in 2017 according to KPMG & Harvey Nash

CONCLUSION

Technology will never stand still, what you see today as an emerging trend will become obsolete tomorrow as companies will continue to eradicate their legacy systems in technology and bring new channels and fields of technical diversity. Even Digital Workforce i.e. Robots will become redundant when companies will switch to Application Programming Interface Software and when Machine Learning will meet the markets on larger scale. The ideal service providers will be more responsible and support customers through their Digital Transformation.

To sum up the future enterprises will benefit of a global environment, open to all and will allow any customer to make use of on-demand online solutions to find and deploy skilled employees no matter what the place will be. Indeed the Digital workspace can be the next big thing in IT in future.


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Sources:

https://www.raconteur.net/

https://www.arvato.com/uk/

https://de.slideshare.net/HartmutJaeger

https://assets.kpmg.com

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