Przemysław Pala
Introduction
Such changes are expected to become noticeable in 2022. Companies that want to keep up with those changes should prepare for the new wave of outsourcing. In the years to come, partnerships between third-party developers or specialist teams and enterprises will be just as meaningful as IT outsourcing companies’ focus on innovation.
State of the IT outsourcing sphere
The list of IT functions that are most often outsourced to third parties will help to assess the current state of the IT outsourcing industry. The functions are listed in descending order of popularity:
- web and mobile app development
- software maintenance
- data centers
- IT infrastructure
- customer support services
- network services
- integration services
- human resources functions
This list will change shortly. The National Outsourcing Association of Great Britain, within the framework of the research campaign, has revealed the directions of outsourcing sphere development after 2021. According to the research, the main trends in this area will be as follows:
- Value before price.
- Outsourcing relationships will no longer focus on price reduction.
- There will be more of a focus on the added value they bring.
- Multiple suppliers.
- Customers will choose numerous companies to assemble the most appropriate team for a single project.
- New areas of outsourcing.
- Customers will more often choose IT developers from Central and Eastern Europe, such as Brainhub.
- The emergence of new business models.
- Outsourcing partners will share responsibility with their customers so that contracts may become performance-based.
- Automation.
- IT tasks will be performed by bots, artificial intelligence systems, and robots.
- Cloud platforms.
- A wave of data warehousing and security projects is expected in outsourcing.
Critical trends in IT outsourcing after 2021. New motivation.
As part of the research, outsourcing companies and their customers were asked why do they outsource IT functions. As a result, 35% of the respondents named cost saving as the most critical aspect, and 23% called the improvement of customer service quality.
Moreover, it can be argued that IT outsourcing will grow along with the number of people seeking to outsource more and more tasks.
Let’s analyze the IT outsourcing contracts too. According to GSA UK, nearly 90% of respondents strongly believe that outsourcing companies and their customers will move to results- and value-driven contracts after 2020.
In addition, 69% predict that outsourcing companies will operate as systems integrators. In doing so, they will share more risks with their customers. Only 31% of respondents expect outsourcing companies to assume all risks. There’s also a strong emphasis on service delivery. A growing number of businesses believe that service delivery issues should be one of the essential parts of contracts. Notice periods and contract validity will also shorten.
The contract models that customers are currently developing and modifying will be performance-based. Such models will assess for both parties to the contract the value and opportunities to build the relationship in the future in light of the results. In this way, IT outsourcing collaboration will reach an unprecedented level, as partners and customers will realize that sharing risks brings them more significant benefits in the long run.
Developing cooperation and competition
As contracts in 2022 become performance-based and players in the market are more open to sharing risks, outsourcing companies will evolve into large service integrators. Given the outsourcing trends described, you may have questions: to what extent will I share risk? Where is the appropriate limit? How do I divide them? And what impact will this have on the reputation of our company and our partner?
In this situation, the best approach for both parties is to cooperate and evaluate different opinions. No one wants to take a risk. So you should become more open to dialogue, but at the same time, try to assess the risk yourself – there may be nothing to worry about.
In turn, this may cause the best possible vendor projects to disappear. On the other hand, some customers will take advantage of this situation.
Key transformational factors of IT Outsourcing
Today’s customers looking for companies to outsource IT functions are constantly in flux and are undergoing many changes. They expect high-quality solutions (also, turnaround time may still matter). Providers must consider the needs of their potential partners and avoid the disappointing results that are commonplace these days.
They believe that many vendors lack flexibility, are afraid of innovation, and don’t keep up with cutting-edge technology. Outsourcing companies need to recognize these sentiments and focus on becoming more customer-centric. This will help them stay competitive, win big contracts, and develop relationships with strong partners.
Welcome to the new age of IT Outsourcing
The conclusion is that today’s IT function outsourcing providers must recognize the described changing market trends to understand the needs of today’s customers.
Leading partners will appreciate a customer-centric approach, transparency, and trust.
In addition, the adoption of the latest technology and data protection on behalf of the customer will soon be necessary. The courage to share risks can be the key to success and fruitful cooperation. Adopting new strategies and following significant trends in outsourcing IT functions could be a great starting point for many market leaders in the next decade.
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