In 2010, Bain & Company uncovered that only one 1 in 10 companies, out of the 2000 companies they surveyed, achieved sustainable growth and drove profits. It implies that companies which can create value and sustainably make profits are only handful. There was one common thing in all these companies – they all outsourced their non-core processes and focus on core areas.
It’s 2018 and nothing has changed since. There is a strong trend to outsource to IT vendors who can develop and support IT functions. Companies are serious about emerging technologies and they seek IT outsourcing companies with expertise in these technologies.
Artificial Intelligence, robotics, machine learning, virtual and augmented reality, Internet of Things (IoT), Big Data and The Blockchain are technologies that will drive the future and impact every industry. The AI disruption is widespread and all trends show that the investment in AI will skyrocket in the years to come.
There was a time when outsourcing was only seen as a cost-cutting measure. It was known as a cheaper and more effective way for organizations to operate. It was a way wherein progressive enterprise received lower cost resources to manage their non-core prospects.
IT outsourcing started in the 1980s and has grown into a sophisticated global market over the years. It involves outsourcing software, hardware and processes. Some of the common services that were outsourced included application development and maintenance, data center, service desk, voice and data network packages. Over the years, as the understanding towards outsourcing became mature, companies started to divest their non-core activities and operations so that they could focus on activities that supported their core business strategy and their strategic vision. CXOs were shouldered with the responsibility to separate core activities from non-core ones. They identified core activities as strategic, the ones that provided customer engagement and value, could drive profits directly. Non-core activities were identified as day-to-day mundane activities, the ones that did not involve customer engagement and did not directly drive profits.
Outsourcing – not cutting jobs but developing competitive advantage
Increased competition is compelling companies to drive maximum benefits from outsourced functions and processes. Earlier companies addressed their software development needs using their own in-house IT department. It led to excessive investment in resources like time, money and efforts. With outsourcing, however, it is possible for companies to accelerate their speed to market and free up their key resources to build their core competency. The most important benefit of software outsourcing is lowered costs to manage IT functions. In fact, the IT resources of the company can focus on solving real issues and begin critical internal initiatives.
If the focus is only on cost reductions, the value of IT outsourcing can never be realized.
There are 3 ways wherein the value of IT outsourcing is realized to the best.
- Dealing with resource demand – If the company hires senior people, there is an issue with resource utilization. If they hire junior people, you can’t be agile to market needs. It is best to carefully identify and scrutinize the software needs and IT functions that can be outsourced.
- Building core competency – Expert software outsourcing companies can help companies to build proficiency in non-core processes and lets them focus on what they do best.
- Outsourcing companies invest in training – the companies don’t have to worry about investing in emerging technologies as leading software outsourcing companies constantly invest in training their employees on current and next-gen technologies.
Now that it is clear how the value of IT outsourcing can be maximized. Here are some ways that outsourcing can give a leading edge.
- Outsourcing helps tap global talent. The lack of talent can be a huge impediment in a company’s growth. If companies outsource, there is an option to tap into a rich resource pool with the flexibility to scale up or scale down the resources anytime as per your requirement.
- It gives a huge opportunity to expand into other markets. If a company is planning to enter a new geography, the outsourcing company can act as a bridge to understand and operate as per the local markets with the help of the company you outsource the work to.
- To excel in a highly competitive and agile market, there are times when R&D is outsourced to boost innovation and productivity.
The real power of outsourcing will be realized from a company’s growth in its capacity to drive change and growth that will mainly from emerging technologies. Self-driving cars, virtual assistants, robots, smart cities, tele health, smart devices and more are realities of today. Leading IT outsourcing companies can keep an eye on these trends, prepare their workforce for these next gen technologies and help the companies to build core competence that is established on emerging technologies. The IT vendors can help fulfill the increasing demand for cloud services and increased data storage capacity.
Are you ready to step into a tech-enabled future with a futuristic IT outsourcing service provider?
About the Author
As a Founder and CEO of ISHIR, Rishi Khanna is responsible for the growth and success of ISHIR. He is a mentor, visionary and motivator who believe in nurturing his people to find their passion and purpose. Rishi plays a critical role in the international business development and partner development. His management experience ranges from offshore program management to managing software delivery.
Rishi has successfully implemented strategic outsourcing and offshore programs in IT, Cloud, Mobile, Artificial Intelligence, IoT, BPO and Digital Marketing functions. Before he established ISHIR in 1999, Rishi worked for Deloitte & Touche in Texas as a Management Consultant.