If there’s a magic sauce in any IT Service provider’s cache, now is the perfect time to serve it for full effect! The outsourcing industry has clearly reached an inflection point of sorts. In the IT world, outsourcing is one topic that continues to make news – for good or for bad – in the global business milieu. Let’s examine a few key trends: larger business trends as well as those tech paradigms that are redefining the ways of an enterprise’s functioning and propelling the industry into a new age of Outsourcing in 2013 and beyond……..one that’s more agile and increasingly disruptive.
Firstly, customers have become more mature. By virtue of dealing with IT Outsourcing on a global scale for over two decades, I can safely say that this is evident from the way customers’ demands have changed today. In line with their shifting priorities and business needs, customers are looking for more flexibility, nimbleness from their partners.
Gone are the days when most companies outsourced IT work to just one big provider – with the thought of avoiding complexities that might crop up while dealing with multiple providers. With the needle having moved significantly, supplier optimization/replacement is underway, to include more nimble and flexible partners – those whose strategy is aligned with that of the company.
A lot of mid-size players are getting a serious look-in and are duly getting selected in the process. Having said this, mid-size players will have to really prove their mettle and enhance their core competencies, value propositions in order to remain effective in the long run. All other factors equal, those that embrace agility and speed will break away from the pack and surge ahead of their peers.
Also, with multiple players servicing the same customer, the competition within has also increased significantly. It is no longer sufficient to do well to stay in the play. Each interaction and engagement with the customer needs to be a truly delightful experience. This, again, can only guarantee that there is no surprise in the relationship!
The IT Services landscape also mirrors this paradigm shift. While the top players have added more size and scale, the industry has witnessed the coming of age of numerous mid-size layers with specific focus areas/specializations. These players are equipped with robust execution capabilities across a wide range of delivery models (onshore-near shore-offshore) and are leveraging their size to their customer’s advantage, with good attention from top management and very quick decision making.
Secondly, Time-to-market has perhaps become the single most critical factor for businesses to succeed. Companies need to move fast to capture a certain consumer base or to leverage a trend or experiment with a certain business model.
This change driver has forced the industry to refocus and look at opportunities for pre-packaged offerings and solutions for common problems. Given that building custom solutions from scratch does not necessarily solve the problem in all cases, companies have been looking at more asset based, service accelerator toolkits to address this concern. It will also shift the focus on partnerships between software players and services organizations in the years to come, to provide solution toolkits, instead of operating as independent entities.
The engineering response to this situation is the increased adoption of agile and lean models in various forms – both in customer IT organizations and the IT industry. However, this also triggered a bigger debate that’s 3-pronged: what initiatives to handle in-house, versus what to outsource in the same time zone, vis-à-vis what can be outsourced to distant locations. Evidently, organizations’ maturity in outsourcing and their ability to manage key initiatives now play a huge role in the decision making process – on whether or not to outsource these agile initiatives.
Lastly, emerging technology trends like big data, cloud, social media and enterprise mobility have shifted organizations’ focus – on bringing these technology paradigms to deliver increased productivity and return on investment, while increasing market outreach of businesses and move them closer to customers, both existing and new.
The rapid and exponential outburst of data is presenting both a unique problem, as well as an opportunity for organizations looking to decode this data and establish a deeper understanding of their business on a real-time basis. What’s fascinating is the amount of data that’s getting generated, which continues to shoot up exponentially! In simple terms, Big Data is getting bigger by the day. This has necessitated a better business understanding of the data integration process, technology and data handling skills that are vital to understand and extract value for businesses. Clearly, this requires clients as well as outsourcing firms to change the way they are organized and engage with each other.
Along with this, there has been a drastic shift in the amount of development being done in the integration and testing stages in the lifecycle of an IT project, compared to what was happening a decade or so back. This unprecedented data explosion has resulted in an increased demand for services on Data management/BI/Analytics, Integration and Testing sides of the business. In the foreseeable future, these will continue to be key opportunity areas for all organizations.
Irrespective of whether organizations are embracing the Cloud on a rapid scale or not, Cloud Computing is increasing the awareness of the costs involved while doing ROI calculations for infrastructure; naturally, it is forcing organizations to relook at optimizing costs in the process. This will lead to a lot more consolidation and optimization exercises, with outsourcers looking for partners who can not only do this, but also take them through the journey of adopting the cloud paradigm for the right areas.
One more interesting development that’s gaining momentum is the way in which Enterprise Mobility is moving beyond the realm of just apps. This is compelling enterprises to streamline their ‘build and integrate’ processes. Innovative usage of mobile devices is another area that needs to be keenly followed. The possibilities as well as opportunities to both clients as well as service providers are enormous – imagine a health scan/check in 10 minutes, or doing it before an insurance application!
Avenues like cost control, investment to expand revenues and an ability to capitalize on new technologies will always be amongst the topmost priorities of any new age CIO. While the prospect of overall growth (at the industry level) has softened on the medium term, there are ample growth opportunities at an individual company level to buck the trend and ascend the next growth orbit. The current environment will clearly differentiate companies with a clear strategy and execution competencies from the rest. This will compel proactive companies to expand, rethink their strategy. Companies which are more nimble, flexible and can provide a credible value proposition to address the new age challenges, while leveraging the disruptive tech trends, will continue to grow at a faster pace than the rest!
Senior Vice President & Head of Global Delivery, Collabera
Morristown, NJ based Collabera is a $440 million fast growing, end-to-end information technology services and solutions provider working with leading Global 2000 organizations from the Banking & Financial Services, Telecommunications & Media, Technology, Energy & Utilities and Manufacturing & Retail domains.