A decade ago, Forbes suggested we were approaching “the end of the age of outsourcing,” and they could not have been more wrong. Today, the growing cost of labor, a shortage of IT and engineering expertise, and the rise of software-as-a-service (SaaS) models have normalized outsourcing as a strategic business solution. Outsourcing crosses industries and service lines, and ten years on from Forbes’s ill-fated prediction, business process outsourcing (BPO) continues to grow in popularity — particularly with larger companies. In fact, enterprise organizations are 66% more likely to outsource business processes than their smaller counterparts.
But popularity does not guarantee utility, and every business strategy needs a strong business case. So, is outsourcing still a beneficial business solution? Do outsourcing models leave companies at the mercy of their vendors and contractors? And what’s the business case for outsourcing in 2022?
Is outsourcing still beneficial?
There are still obvious benefits to outsourcing, so much so “that 45% of global corporations are planning to outsource more work in the next 18 months.” Forbes calls outsourcing business teams “a viable cost resilience strategy,” and contracting offshore IT talent has long been shown to cut down on everything from property taxes to benefits costs. The outsourcing advantages most often cited by companies include:
- Access to a larger talent pool, more experienced teams, and specialized skills
- Lower labor costs
- More work completed in less time
- Internal staff more focused on core business competencies
- Easier scaling — either up or down — when necessary
Obvious pros aside, the answer to whether outsourcing will work to your company’s benefit depends on how thoroughly you research and prepare it — and the governance and oversight you are willing to invest in outsourced projects and processes. Outsourcing involves a measure of risk, and poor governance increases it, so it makes sense for CIOs and their teams to weigh every planned outsourcing strategy against its potential outcomes, both good and bad. Assessing all possibilities is critical to reaping the rewards of outsourcing while limiting any associated risk.
Outsourcing trends for 2022
Trends for next year show an exponential increase in outsourcing as a business strategy. Recent data reveals some surprising numbers: 83% of IT leadership planned to outsource cybersecurity this year, 24% of small businesses outsource to improve their efficiency, and the global outsourcing market is expected to be worth as much as $397.6 billion by 2025.
IT outsourcing is clearly prevalent and widely expected to continue growing. Outsourcing trends for 2022 include:
- Increasing focus on artificial intelligence (AI) tools outsourced to SaaS providers to automate processes and collect analytics for data-driven decisions
- Expanding remote contractor labor pools to cover org-chart related positions
- Increasing access to cloud computing as an outsourced service offering
- More frequent cybersecurity outsourcing, particularly as labor pools continue to thin
As companies move to cut costs and enhance efficiency, look for a clear increase in outsourced business processes, infrastructure, services, and even key IT roles. If your organization has a clear outsourcing mandate, how can you build a business case for more strategic IT outsourcing for 2022?
Building a case for IT outsourcing for 2022
Renewed focus on IT outsourcing demands a close examination of — and clear emphasis on — the goals and ROI you’re trying to achieve. Most companies don’t have enough margin for error to justify experimenting with unproven, or unsupported, BPO and IT service offerings. Use these key steps to maximize your chances for outsourcing success:
- Do the research to justify the “why” behind your proposed initiative. What benefits do you expect from it, and how will they align with your current business strategies?
- Determine the positions, services, and business processes that will fall under your outsourcing model, and establish clear oversight procedures.
- Define clear metrics for ROI and carefully chart outcomes to assess for course correction as needed.
- Consult a trusted advisor with experience and expertise in strategic IT sourcing.
Building a strong, strategic case for IT outsourcing requires a comprehensive understanding of the pros and cons, IT and digital transformation trends, and your company’s goals for the coming year.
Visit windzr.com to learn more about strategic sourcing for 2022 and beyond.