What to expect in IT outsourcing in 2019 ?
Be ready and align your IT team to the trends in 2019 The demand for IT contracts will increase as more businesses take advantage of outsourcing their software models rather than hiring an in-house IT specialist. The “gig economy” continues to arise, and more business keeps coming inside the market so there will be a new set of trends which will alter the IT outsourcing flight path.
May 20, 2019Kirithiga SHuman Resource Standard
If your business should keep up the pace with the scalability of this industry, here are a few trends in 2019 that will determine the future standards of IT outsourcing.
Cost Effective will change to Being EffectiveOne of the major deciding factors in outsourcing projects is the cost. Most of the companies outsource them IT work because it is cost efficient than setting up an internal IT team. It makes sense when you need to hire an in-house team, invest in the HR, training of your resources, payroll, holidays, incentives, adhere to all the mandatory employee policies. But when you outsource you save time, effort and cost. While you have someone build the product or the software for you, you can focus on bringing in more revenue, customers and plan on future goals of your project.
But in 2019, this will no longer be valid, and all the cost-effective will change to “being effective” concept. The business will make contracts with IT vendors who are producing effectiveness in their project will (even if their invoice is high) be awarded more. Factors like business value, management performance, the environment of the workplace of your IT vendor, ethics and virtues they believe in will take more points while the buyer decides.
Multiple IT vendor EnvironmentsEnterprises are not built with a full-fledged IT team to handle all of their functionality. The in-house team cannot sufficiently take care of the demands of the organization. It will lead the business to opt for outsourcing to multiple vendors. The shift from a single IT vendor to multiple IT vendors will arise. We can see many of the IT firms narrowing down their specialization to generate a solid focus on one domain.
Multiple IT vendors will arise, specialized in one area, increasing the core competency of each technology. That said, outsourcing companies with multiple talents, skills, and expertise functioning under one roof will gain an advantage over others and stand out from the crowd in the long run.
New IT outsourcing hubsCurrently, India and China share equal shares in the outsourcing hub. Major of the US and UK IT projects are outsourced to these Asian giants. They are considered being the undefeatable in the IT hub, because of low-cost labor, different time zone, various offshore remote centers across the country and good communication skill.
In 2019, there will be competition in this market. Although India and China might hold the first place still because of the ratio of number IT specialists is comparatively high, Poland, Ukraine, Romania, and Belarus will give a good fight in the IT outsourcing industry. Ukraine has already established itself with a nickname — “fresh face” for offshore development center. In two years, there will be a rapid increase in the number of IT developers in that country.
New Contract ModelsIT outsource contracts will be designed based on the outcome, not the output. Business and the IT outsource vendor will join to leverage more mutual benefit to both parties. The vendor and the buyer will share an equal amount of risk and responsibility.
Example: If a business outsources a mobile app development, they will test the IT vendor’s performance based on the product success rate in the market. If there is any risk hidden which may cause a bad outcome although the output of the vendor is submitting a fully developed mobile app, they will be held as accountable too.
It means, outsourcing will be long-term partnership rather than short-term contracts. The crucial part of the contract will not be processed but procurements. So the outcome of the solution produced by the IT vendor will rank their effectiveness scale.
Outsourcing core IT functionsThe IT core function outsourcing is marginally low compared to the non-IT function outsourcing. But with the new contract models proposed, the business will outsource their core IT functionalities more. Enterprises will look for a strategic partnership with specialized IT partners. Big companies will feel the need to stay ahead of the competition by equipping with niche-specific IT know-how’s. But still, non-IT outsourcing will remain popular on an equal level.
Cloud sourcingThe demand for cloud computing will increase in the coming years with more businesses moving to the cloud. Gartner predicts the shift towards cloud will impact $1 trillion in IT spending by 2020.
With the increasing demand for cloud outsourcing, companies will need cloud platforms from public sources for data storage purpose. It will become important to offer online data centers and the right equipment by the service providers.
Businesses operating over the cloud will be more concerned about security threats and will look to eliminate all threats by outsourcing security services. This way they will make use of the expert knowledge of the vendor and easily delegate the responsibilities.
ConclusionIn the GSA report, out of the 70% outsourced business 35% will be IT, which is exactly half the total value. The outsourcing industry looks promising to both the software developer and the business enterprises. Business will search for the IT vendors who can give quality edge solutions to their enterprises.
What does your company plan to do in 2019? If you plan to outsource IT functions, look no further. Sign Up to get a free consultation for your IT projects. Find out more about our software services.
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