Trends Shaping the Outsourcing Industry

Includes: ACN, WIT
by: Hiren Doshi
  1. Traditional outsourcing, as we know today, will be dead in 5 years time. If not completely dead, it will certainly no longer be the dominant service delivery model for today’s outsourcing heavyweights. Bespoke or anything custom will be heavily scrutinized by our customers' governance bodies and the demand for these will soon start fading away with realization of benefits associated with PAYG cloud based business process services delivery models with a trade off for adopting standard set of business processes tuned to industry best practices.
  2. Today’s SI companies will have to learn to deal with business organizations rather than just IT organizations as business will start becoming the key decisionmakers in choosing the providers as purchase moves from systems to service. They will have to retrain or retrench thousands of consultants whose job today is to designing bespoke business processes and developing systems for every other customer. There will be fresh demand for consultants with broader knowledge and integration skills across infrastructure, apps and business processes
  3. Sharing of best practices across industry eco-system will improve as a result of proliferation and wider adoption of cloud based platforms. Few companies with foresight will take the lead in evolving the market standards and industry benchmarks in collaboration with their partner eco-systems and others will follow the suit.
  4. With evolution of cloud based standard and simple IT landscape, it will be relatively easy to integrate two companies from a IT perspective in a acquisition or merger situation. This will lead to more of such activities taking place where IT integration was perceived to be a hurdle in achieving true benefits of scale.
  5. The CIO’s role will survive but expectations of him/her will change dramatically. Instead of being the owner of corporate systems and infrastructure, he will take the role of being the caretaker on behalf of the service provider. He will be expected to support the normal business cycle fluctuations within the committed OPEX & Zero CAPEX ). He will play a crucial role in determining where to place the company’s bet to choose the right suppliers with financial muscle to survive and a culture to bring the necessary innovation to help the company remain competitive in the market. CIO will be renamed as CIO (Chief Integration officer) and will be entrusted to choose the right vendor eco-system with plug and play capabilities.
  6. Enterprise technologies have typically followed evolution of consumer technologies over the last several decades. Mobile computing, cloud computing, social media are some examples. Following the same trend, enterprise communities will evolve with similar business processes practices fostering stronger collaboration and speed of doing business within the same networks of communities. The underlying cloud platforms will play a catalyst role in enabling and supporting such communities.
  7. IAAS vendors such as Amazon (NASDAQ:AMZN) and Google (NASDAQ:GOOG) will be in the limelight for few years until the bulk of the underlying infrastructure is migrated to cloud infrastructure. Post that, application specialists with vertical appeal and superior time to market with strong business process capabilities will emerge with a highly scalable and profitable business models.

Disclosure: No Positions