Understanding organizational skills and sourcing requirements/gaps and identifying how to address them is fundamental to providing effective IT services. The choices are broader than merely in-sourcing or outsourcing. Outsourcing considerations such as onshore, near shore, offshore are not often easy; as is service provider selection within the respective geography. For those resource gaps met by outsourcing, it becomes essential to ensure that the relationship and governance processes are in place, as well as understanding/addressing the overall organizational impact. Having experienced legal counsel during contract negotiations and management is vital.
Staffing/sourcing remains the largest component of IT budgets: 59% (including consulting and outsourced staff). Both internal IT staff and domestic outsourcing are actually declining and anticipated to continue to decline, while offshore staffing and offshore outsourcing are on the rise. Leveraging less expensive offshore workers is an initiative that most organizations continue to consider. Whether domestic or offshore, the proficiency for selecting and managing outsourcing services is essential.
Like the rest of IT, the advent of robotics process automation/cognitive computing, internet of things, Artificial Intelligence, Cognitive Computing, Blockchain, and SMAC (Social, Mobile, Business Analytics, and Cloud) have caused outsourcing to evolve from being purely a cost-savings initiative to a driver/enabler of business transformation. This must be done in light of budgetary constraints, scarce resources, regulations, and the demand to beat the competition. In addition, these new technologies will have a profound impact on outsourcing service providers.
The following considerations have become essential:
- How to innovate to increase margins, accelerate time to market and agility, and boost customer satisfaction
- The demand for global arbitrage
- Embed real innovation with demonstrable business value
- Align sourcing strategies with IT-business strategies
- Reinvent the RFP, contract, and governance processes
- How will emerging technologies transform clients, service providers, and vendors
