Key trends are changing technology outsourcing


9 October 2014

Technology outsourcing is changing, of that there can be little doubt, but what are the major trends that are likely to effect this change?

According to certain quarters, in much the same way that cloud computing is forecast to have a hybrid future, outsourcing too will see a mix of sources, services and providers to get the best possible value for the business.

According to Atul Vasithsha, chairman of outsourcing consultancy NeoGroup, a hybrid model, combining insourced and outsourced offshore services, will become a viable alternative to more traditional arrangements.

Global service models
“Companies are starting to invest more in global business services models, [which combine] the best of shared services and outsourcing under a common governance model. This is seeing processes being offshored in captives by industries that have traditionally been reluctant, such as media and entertainment,” said Vasithsha.

Adding to this is Scott Staples, president of the IT service provider Mindtree, which serves the Americas. Staples said that the majority of organisations need to get the right combination of the best talent and most cost effective IT services.

“The best sourcing strategies treat outsourcing and insourcing as complementary not competitive, and leverage onsite, onshore, offshore and nearshore options all in the same model,” said Staples.

Another trend that will change the way that organisations engage in outsourcing is the area of service integration. According to Lois Coatney, director of outsourcing consultancy Information Services Group, after a period where organisations experimented with various outsourcing models, “client organisations will increasingly focus on service integration as an integral core competency and take key functions back in-house.”

“In outsourced models,” said Coatney, “clients have found they lose visibility and direct control of service management effectiveness, and that they become too remote and unable to fill their fiduciary responsibility. Clients are recognising that a solid internal service integration capability provides better flexibility and knowledge of the business required to onboard new and specialty service providers.”

Results based
Outsourcing deals will move to a more results based model too, according to industry analyst Forrester. Principle analyst Liz Herbert has said that the common methods for measuring outsourcing have been around the number of bodies required and help desk tickets. But Herbert maintains that “those 500 help-desk tickets don’t have anything to do with what the business is trying to accomplish.”

“If an airline outsources its call centre, the purpose of that call centre is to solve problems,” said Herbert. “But measuring it by call volume doesn’t address why the airline chose to outsource. To save money? Yes. But are they improving customer service?”

But perhaps the most valuable trend that is predicted for outsourcing is the potential for the technology partner to become more involved in the innovation and development of the business itself.

Innovation partnership
According to Anirban Dutta, director of Global Strategic Business Development at IT services company CSC, outsourcing customers are increasingly seeking more vertical expertise from partners. “The vertical integration among infrastructure, applications and operations will ensure efficiency, accountability and alignment between business strategies and enabling services,” said Dutta.

Whereas more traditionally, such technology partners were tasked with efficiency and cost reduction, there has been rising demand for these partners to also identify inefficiencies within the client organisation’s internal environment that contribute to high costs, and how such issues can be addressed. Technology partners are being given more latitude to bring forward savings and improvement opportunities within the client operation, maintains Bill Fowler, principal consultant, Compass Management Consulting.

This trend for closer partnership, partner innovation and nearshoring to accommodate such relationships, will be explored in TechFire XII, in association with Comtrade, in the Gibson Hotel, Dublin on 22 October.

The panel of experts will talk about experiences internationally and how the trends are impacting locally. The user experience of education company Houghton Mifflin Harcourt will detail how a global operation can coordinate efforts to ensure the best mix of services and sources. The presentations will be supported by exclusive results of the TechPro survey, also in association with Comtrade, on outsourcing attitudes and practices in Ireland. The survey has already shown that among Irish organisations, quality and skills are more important than cost when it comes to outsourcing.

For more information on this and upcoming topics, and to register, see the TechFire web site.


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