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Watch Out for These IT Outsourcing Trends in 2014

Apr 22, 2014 5:00:00 AM

by Charles Bystock

it-outsourcing-trendsThis year is well underway, but it’s never too late to consider what might unfold in the way of IT outsourcing trends as the year continues to evolve. One of the most interesting trends industry watchers seem to agree on is that DIY is on the increase.

IT outsourcing has been very popular with companies of all sizes and types for quite a number of years. The dual needs to control costs and increase productivity have become ubiquitous in the business world, and outsourcing has offered excellent, flexible alternatives. Often companies have taken advantage of outsourcing consulting services to help configure and negotiate deals.

If IT outsourcing trends indicate a desire to recapture some of those outsourced services, could that be because corporate CIOs feel they’ve learned from their consultants and now feel comfortable doing the job themselves? A number of executives cite lack of control as a primary reason for the change, and certainly the marketplace now offers new technologies that make it easier to manage change from within.

Only time will tell if bringing IT home again is, indeed, a significant trend – and, if so, whether the pendulum will once again begin to swing the other direction. Meanwhile, here are some other IT outsourcing trends to watch out for this year:

  • Artificial intelligence is a field that’s taking quantum leaps forward. That affects IT outsourcing trends in that automation is making machinery “smarter,” and it’s taking hold in the IT department in new ways. CIOs and the CFOs looking over their shoulders can control costs by allowing robots to perform tasks previously performed by people and by reducing the amount of work real people need to do.

Paid labor isn’t cheaper, there’s just less of it, but the net result is greater efficiency and lower costs.

  • Some industry analysts say as much as 30% of outsourced IT services will be re-homed this year. One reason is that internal IT staff can now implement more advanced technologies – one example being version three of the Information Technology Infrastructure Library – to help manage both governance and operations.
  • On a related note, the popularity of hybridization is moving into the realm of outsourcing. Perhaps that’s no surprise, since hybrid configurations are a direct result of corporate need for tailored services. In terms of IT outsourcing trends, look for more companies to devise individualized combinations of insourced,  outsourced, onshore and offshore services that maximize both talent and cost savings.  
  • Industry watchers also predict service integration will be brought back in-house to become a core function instead of an outsourced service. As the use of multiple sourcing providers has increased, a number of companies have expressed concern that they aren’t able to maintain the visibility or control they want. They feel removed and, in some cases, less effective.
  • Expect to see IT outsourcing trends that alter deal-making this year. Companies who have relied on omnibus packaging of services from a single provider are now looking to divide things up, to increase value and versatility. On the flip side, some companies whose comparatively small deals have left them feeling undervalued by providers will be looking to consolidate in order to boost their negotiating position.
  • And as more and more companies see the distinct value in working with multiple providers, they are becoming adamant in their expectation of harmonious group cooperation. Competition is good, but inability to work smoothly with others is not.

As some things become more simplified and streamlined, others become more complex. It’s the way of the world we live in, where change is the only “trend” we’re guaranteed to see. No doubt corporate IT managers and C-suite execs will continue to grapple with the alternatives – always changing themselves – to discover the balance of in-house and outsourced functions that provides the best use of resources for their organizations. Which IT outsourcing trends will affect your organization this year?

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