Organizations outsource IT infrastructure to third parties for a variety of reasons: from the desire to increase operational flexibility to the need for new specialized skills and cost savings. However, market trends are changing and you have a lot of updates and modern trends on the blog of SpdLoad. According to a GSA UK report, some outsourcing trends will become less significant in the future.
It is anticipated that such changes will become noticeable in 2023. Companies that want to keep up with the times must prepare for a new wave of outsourcing. In subsequent years, partnerships between third-party developers or teams of specialists and enterprises will be as important as the focus of IT outsourcing companies on innovation.
State of IT Outsourcing
A list of IT functions that are most often transferred to third-party companies will help assess the current state of the IT outsourcing industry. It was prepared by the Statista portal in 2017 and reflects current trends in this area.
Features are listed in decreasing order of popularity
- web and mobile application development,
- software maintenance
- data centers
- IT infrastructure
- customer support services
- network maintenance
- integration services
- HR functions
In the near future, this list will change. The National Outsourcing Association of Great Britain (National Outsourcing Association) in the framework of a research campaign has identified areas for the development of outsourcing after 2023.
According to studies, the main trends in this area will be the following:
Value before price. Outsourcing relationships will no longer focus on lower prices. More attention will be paid to the added value that they bring.
Several suppliers. Customers will choose several companies for one project in order to assemble the most suitable team.
New areas of outsourcing. Customers will more often choose IT developers from Central and Eastern Europe, such as Brainhub.
The emergence of new business models. Outsourcing partners will share responsibility with their customers, so contracts can become results-based.
Automation. IT tasks can be performed by bots, artificial intelligence systems and robots.
Cloud platforms. In the field of outsourcing, a wave of data storage and security projects is expected.
Key Trends in Outsourcing after 2023
As part of the research, outsourcing companies and their customers were interviewed about the reasons for the transfer of IT functions to third parties. At the same time, 35% of respondents called cost-saving the most important aspect, and 23% called improving the quality of customer service.
In addition, it can be argued that the field of IT outsourcing will grow along with the number of people seeking to transfer more tasks to third-party companies. Despite the different reasons for using outsourcing, most organizations agree that improving customer service and identifying new opportunities attract them more than cost-saving considerations.
According to GSA UK, almost 90% of respondents strongly believe that both outsourcing companies and their customers after 2023 will switch to results-based and value-based contracts.
In addition, 69% of respondents predict that outsourcing companies will work as system integrators. In doing so, they will share more risks with their customers. Only 31% of respondents expect outsourcing companies to take all the risks.
Focus on service delivery
More and more business representatives believe that the provision of services should be one of the most important parts of the contracts. Notification periods and contract validity will also be reduced.
Contract models currently being developed and modified by customers will be based on results. Such models will evaluate the value and opportunities for the development of relations in the future for both parties to the contract, taking into account the results obtained. Thus, cooperation in the field of IT outsourcing will reach an unprecedented level, as partners and customers will realize that sharing risks ultimately brings them more benefits.
Development of cooperation and competition
Since contracts in 2023 will be based on results, and market players will be more open to sharing risks with each other, outsourcing companies will turn into large service integrators.
Considering the described trends in the field of outsourcing, you may have questions: to what extent will I share the risks? Where is the appropriate limit? How to separate them? And what impact will this have on the reputation of our company and our partner?
The best approach for both parties in this situation is cooperation and assessment of different opinions. Nobody wants to take a chance. Therefore, you should become more open to dialogue, but at the same time try to assess the risk yourself – perhaps there is nothing to worry about.
Such situations in the outsourcing market may force competing companies to fight for the largest deals and begin to offer competitive solutions. In turn, this can lead to the disappearance of the best possible projects of suppliers. On the other hand, some customers will be able to take advantage of this situation.
Key Transformation Factors
Modern customers looking for companies to outsource IT functions are constantly moving and are undergoing many changes. They expect high-quality solutions (also, the lead time may still matter to them). Suppliers must take into account the needs of their potential partners, and avoid disappointing results that have become commonplace these days.
Customer dissatisfaction with outsourcing deals is growing. They believe that many vendors lack flexibility, are afraid of innovation, and do not follow cutting-edge technology. Outsourcing companies should recognize these sentiments and focus on increasing customer focus. This will help to remain competitive, achieve large contracts and develop relationships with strong partners.
Modern IT function outsourcing providers must recognize the described trends in a changing market in order to understand the needs of modern customers. Leading partners will appreciate the customer-oriented approach, transparency and trust.
In addition, the implementation of the latest technologies and data protection on behalf of the client will soon be of great importance. Courage in sharing risks can be the key to success and fruitful cooperation.
Implementing new strategies and following the main trends in the field of outsourcing IT functions can be an excellent starting point for many market leaders in the next decade.