Key Areas Where IT Outsourcing Will Experience a Change in 2020

It services are outsourced by business organizations for multiple reasons that starts from cost savings to meet new needs and operational flexibility. However, the market trends are changing and as per reports, some outsourcing trends will become less significant than they have been recently.

While organizations believe themselves to be more progressed with data analytics, process transformation and outcome based contracts, they believe that the areas are worthy to be further invested as the company matures.

2020 would be the year where changes are going to be visible and the companies that are willing to stay updated need to be prepared for the new wave of outsourcing.

Usually the coming years will show that partnerships between the outsourced developers or team and enterprises are going to be a matter as much as IT outsourcing companies that are innovation friendly.

There are various questions like, is outsourcing going to evolve in the coming years or will it simply twitch a little bit? Let’s check the report released by the National Outsourcing Association (NOA) that predicts the changes that are bound to happen in IT outsourcing in the upcoming 5 years.

What does the report say?

The basic:

Buyers and suppliers both agree that the outsourcing industry will experience a growth. About 35% claim that it will increase significantly and 80% of the respondents predict an upsurge in IT outsourcing that will ultimately make it more prevalent.

About 35% of those who were surveyed chose the cost savings as the core factor and 23% wanted to improve the customer experience. If done in the proper manner, IT outsourcing allows both the parties to learn from one another, from simple skills to introducing the improvements to the way the organization is run.

Key areas that will have an overall impact on the outsourcing industry:

While the overall impacts of the changes in the outsourcing industry in the year 2020 may vary, but the relationships between the customers and the outsourcing companies will evolve from transactional towards a spectrum of relationships based on the varied degrees of interdependence.

On demand relationship will increase:

While some companies pursue relationship models having high levels of collaboration and interdependence, others will move towards crowd sourcing or hybrid models to overcome the limitations.

These on demand models will allow the companies to plug and play the services from a huge pool of resources when required and by offering a pay for use approach, it allows a streamlined process for getting the activities completed on demand. It is by leveraging the benefits of crowd sourcing and taking the advantages of real time access to the resources, that companies are now able to acquire the services as a reduced cost and with higher level of flexibility.

Focus will increase on network management:

In 2020, the reorientation of business from supply and value chain to value networks will continue. These networks are designed to increase the access to the resources, achieve scale, improve the service outcomes and boost flexibility with offering cost efficiency and lean structures. So, different types of relationship networks will also grow in importance during the coming years.

To take advantage of the relationship networks, business organizations must learn to operate in their organizational boundaries.  Many are working towards long term benefit and trust based relationship with key partners already. The companies must be aware that relationship networks can also increase the risk of dependency and lock business into a rigid structure.

Co-sourcing will gain importance among business:

In order to reduce the business vulnerabilities, business owners can seek outsourcing partners with increased strategic alignments, shared values, shared risks and higher value exchange.

It is through these highly collaborative and strategic relationships that companies will try to reduce their risks and generate the new value that can be converted to a competitive advantage. The relationship can be maintained through the combined efforts of both the internal and external partners where both have a mutual interest in the collaboration’s outcome.

Co-sourcing helps to relinquish the control over some business areas in order to focus on enhancing the competitive advantage and also collaborate with relevant partners to co-create new value. Ultimately co-sourcing helps both the parties to receive greater value and retail less risk.

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