IT Governance

7 Sizzling IT Outsourcing Trends

As technology changes, strategy changes with it. And IT outsourcing evolves with both of them in turn. In an article for CIO magazine, Stephanie Overby describes seven percolating trends in IT outsourcing that you should keep in mind:

  1. Rapid software development
  2. Cloud integration
  3. Talent wars
  4. Automation results
  5. Captive offshore delivery centers
  6. Populism and protectionism
  7. Business-based metrics

Sources of Change

IT outsourcing firms are not kept at arm’s length anymore; they are strategic business partners. Such partnerships enable better benefits realization on both sides. One thing businesses are looking for is that outsourcing firms can support them as they make transitions into agile and/or DevOps. They also want these firms to be able to integrate into hybrid cloud environments, where public cloud workloads are combined with more sensitive data on the private cloud. Conversely, remote infrastructure management (RIM) is becoming less of a priority, specifically because of how inexpensive cloud is.

Locating talent in lower-cost areas of the world is becoming less important too, since the most value is derived from exploiting automation and new technology. CIOs are fixating on getting the best people with the best skills rather than the cheapest workers. The same is true even of service desks and call centers. Nevertheless, jobs will continue to be had overseas:

With technology becoming a competitive differentiator across industries, every company is becoming a tech company — from automakers to oil and gas providers to retailers. And that’s leading a broader swath of previous IT outsourcing customers to set up their own captive technology services delivery centers offshore, says [Steve Hall, a partner with sourcing consultancy Information Services Group (ISG)]. “To compete and scale, enterprises want ‘badged’ resources, which means captives are back as a popular model to accelerate the adoption of automation and maintain the intellectual property for cutting-edge solutions.”

The effects of populism and protectionism on outsourcing remain to be seen, but H-1B fears have subsided for the time being, at least. However, on the whole, growth seems to be slowing down for the outsourcing industry, perhaps as a result of growing business and technological uncertainty.

For a longer discussion, especially about trends that are fizzling out in IT outsourcing, you can view the original article here:

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