Recently we examined some IT outsourcing trends for 2014, noting that the underlying theme for all aspects of business today – not just IT – is that change is a constant. Outsourcing as a business management mechanism is now widespread, popular with all types and sizes of companies for all sorts of business functions.
But some sources say 2014 may see a resurgence of companies looking inward instead of outward to manage their IT operations. That’s just one of many IT outsourcing trends predicted by insiders.
Quantifying the cloud.
Expect the cloud to become more sophisticated and more strategic when it comes to service provision. No one questions the cloud’s staying power any more, but especially for large and complex organizations, effectively adopting and managing cloud-based services has been a significant challenge.
Look for better-defined and more consistent metrics that companies and their providers can use to assess the value they’re receiving and also overall ROI. IT managers may want to use those metrics to compare cloud services to other solutions, too.
Infrastructure heads East.
IT providers in India, well-established as an international resource for business process outsourcing and application development, are reportedly interested in expanding their access to infrastructure deals as well. It’s possible that 2014 will be remembered as the year India-based providers began to capture contracts that previously would automatically have gone to big U.S. names like IBM.
That could represent a significant threat to business-as-usual in the infrastructure arena, but client companies are looking everywhere they can for cost efficiencies, innovation and whatever else will help them remain competitive.
The complexity of things makes governance more complex, too.
Globalization, more diverse and multiplicity of vendors – more of anything always means more complexity. Companies are struggling to develop and maintain protocols and procedures based on the latest industry trends, best practices and compliance regulations, but they see this as a critical component of management effectiveness. Will there be a shortage of labor skilled at handling this important component of IT?
Lower-priced IT outsourcing consulting.
Some industry watchers predict that companies who have gained substantial IT outsourcing experience will try to save money going forward by trying to negotiate their own deals for IT services, without benefit of consultant back-up.
Consultants will have to rethink their approach to pricing in order to retain clients, possibly by taking on smaller projects that cost less. Or by focusing on client results rather than hourly or project-based fees.
It’s worth re-emphasizing a couple of points IT outsourcing trends mentioned in our earlier post.
A key trend for 2014 is an increasing number of IT outsourcing deals, but with lower contract values. This is happening in part because comprehensive single-source deals negotiated a few years ago are coming up for renewal. Client companies now want to take advantage of specialized capabilities offered by certain suppliers that can provide strategic advantages as well as always-important cost efficiencies. They’re dividing up the work to make that happen.
With multi-sourcing growing as an option, companies are becoming more comfortable with the concept and more adept at managing multiple providers. The big challenge? Effective coordination and collaboration.
Vendors themselves are regarding profit margin as a more relevant success metric than gross revenue, as clients and providers are learning how to work better together. “Everyone wins together” is the new, mutual goal.
Also, the growing trend toward hybridization in all aspects of IT is spreading to outsourcing deals themselves. Companies want to address their own unique needs with unique-to-them sourcing solutions.
Competition plus continually evolving technology will drive the next wave of trends. For 2014, it’s clear that IT outsourcing trends are responding to a delicious mix of challenges and opportunities brought on by increasing automation, mobile, social, the cloud and growing emphasis on data analytics.