As the global economy remains turbulent, corporate decisions-makers continue to remain laser-focused on cost containment and finding new ways of generating additional productivity and value to their organizations. As a result, these macro factors are shaping many of the current trends in IT outsourcing, though not all.
Below are the key IT outsourcing trends that have emerged in 2011 and are likely to continue for the foreseeable future:
1. Re-evaluating existing agreements for additional cost savings opportunities. For a growing number of outsourcing customers, IT outsourcing contracts are being treated as living documents that are continuously addressed, refined, and optimized over the course of their existences. Let’s say your company is receiving desktop support services under a five-year agreement. Not only are the market costs for support and services likely to change over that period of time, but attentive IT and contract managers are likely to discover other opportunities to improve SLAs (service-level agreements) or other aspects of the contracts, some of which can often benefit both provider and customer.
2. The continued drive toward cloud-sourcing. Companies such as Amazon and Google are continuing to push the bar on a wide range of IT services that can be delivered or supported via the cloud, including storage and application support. As cloud-based services continue to mature, and customers become more comfortable about privacy and security concerns, new types of IT services will emerge, creating additional opportunities for companies to consider. Such services may be particularly attractive to companies that are looking to take advantage of either a pay-by-the-drink approach or IT support services that can be scaled up or down based on seasonal or variable business demand.
3. Growing offshore opportunities outside of India. While India remains a popular offshore IT outsourcing destination, buyers are increasingly exploring opportunities in other emerging markets, including Singapore, Vietnam, Venezuela, Brazil, Ireland, Poland, Romania, and Kenya. Many of these destinations have gained in popularity thanks to an expansion of educated engineers and improvements in local infrastructures.
4. The continued expansion of rogue IT outsourcing by business units. In their zeal to act quickly on desired IT/business support services and circumvent process and architectural standards established by their enterprise IT organizations, many business leaders are doing an end run around on corporate IT and hammering out IT outsourcing agreements with third-party service providers on their own. This does not mean service providers are disregarding the IT department’s established guidelines. A providers first option is to be consistent with a company’s current IT standards and procedures unless a change is required.
5. The number of mega-deals being reached continues to shrink, as smaller, more targeted deals are more in vogue.According to industry analysts and consultants, the number of multi-billion dollar outsourcing deals is declining as enterprise companies opt more often for smaller, more targeted deals. Providers have fully recognized this trend towards smaller deals and are angling towards the historic “penetrate and radiate” approach of building strong relationships with customers and then hoping to expand their footprint of services with them.