2014 IT Outsourcing Changes

The year is almost over. It is time to see what main trends were implemented in the IT outsourcing world during the last year. Outsourcing budgets were expanding over the last year, compared to other IT segments; and because outsourcing is a long-term and strategic decision, companies don’t make big changes in their outsourcing budgets. Outsourcing is taking on a more strategic role, moving away from a simple cost-cutting strategy toward a partnership among IT companies based on quality and value.

Check our blog post below to see what predictions became a reality during the last year.

Hybrid Outsourcing Becoming Popular

A hybrid model, combining outsourced and insourced offshore services, have gained more attention as an alternative to a traditional outsourcing model. Most companies have a goal of getting the right combination of best tech talent and most cost-effective IT services.

The best outsourcing strategies value outsourcing and insourcing services as complementary not competitive and leverage onsite, onshore, and offshore options all in the same outsourcing model. As a result, companies are able to take advantage of hybrid models.

Service Integration under Companies’ Responsibility

In 2014 companies had taken control over service integration that before has been given to third-party providers. After trying many different outsourcing models, CIOs focused on service integration as an internal core competency and took key functions back into the company. That’s happened because many companies have found that they are losing visibility and direct control over service management effectiveness. CIOs realized that a solid internal service integration capability provides better understanding of the business processes inside the company.

Lower Cost Consulting Models Rise

An increased number of experienced IT outsourcing companies decided to use less services provided by third-party consultants and to set up their IT services deals by their own. Most companies have noticed an increase in the ‘coaching model’ or ‘light-touch’ third-party advisory for experienced outsourcing customers.

As a result, more consultants offered light-touch services for clients with less intense financial spending.

Big Deals Get Smaller. Small Deals Get Bigger.

Multisourcing is being the key for success among small companies. Big deals more often were accumulated and resourced in smaller pieces. Many smaller deals have been rolled up into midsize deals as customers seek more leverage with the vendors.

Nowadays organizations can chose from a panel of approved providers which means they can effectively run a competitive bid process for certain projects to ensure they are getting the exact service and cost that they’ve expected.

Management Gets Harder and More Interesting

With increased tendency for multisourcing among several outsourcing providers, managing the whole process was bound to get trickier and more interesting.

Most companies are facing challenges in recruiting and hiring skilled resources. The hybrid outsourcing model presents real career opportunities for management professionals. This area needs a talent and there is no forthcoming from industry or the universities. Colleges with specialized courses are just beginning to produce young graduates looking for such roles. At the same time in another case companies can look at full-service outsourced vendor management.

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So what’s going to happen with IT outsourcing market in 2015? What challenges and opportunities are coming? Share your thoughts with us.