5 Trends In IT Outsourcing (and How To Capitalize Them)

The pandemic has certainly revolutionized the way we all work. It turned remote working into a new standard of doing business, forced companies to reinvent themselves and provide new services, and even changed how people relate to businesses everywhere. All of those will surely have lasting effects that we can fully fathom today.

There are other things we can foresee, though. For instance, how the COVID-19 crisis has benefitted IT outsourcing services. Since virtually every business in the world had to go digital to adapt to the new reality, the demand for software engineers and developers able to help them with that transition rose exponentially. Being highly demanded professionals already, that extra increase in the demand drove a lot of companies to consider IT outsourcing companies to supply the necessary talent.

This, of course, isn’t a new trend, since IT outsourcing has been a corporate practice for decades. However, the Coronavirus pandemic will have a huge impact on it. In fact, some are expecting that spending on IT services will amount to one trillion U.S. dollars worldwide in 2021, much of which will be spent on outsourcing. With such a level of investments, it’s only natural that the IT outsourcing industry itself will see some changes. Here are the top 5 trends that will surely see a rise in the coming months.

New Objective For IT Outsourcing

According to a recent Deloitte survey, organizations now feel that they need to outsource to cover two new objectives. First and foremost, a lot of companies are now considering outsourcing to cut costs that allow them to recover more quickly from the impact of the pandemic. And second, a lot of companies feel that investing in key digital assets today will allow them to better navigate the post-pandemic landscape – to the point where they expect to thrive due to those investments.

While the cost reduction objective isn’t new for IT outsourcing, the idea of investing today to gain a future advantage surely is. Tech has always been a key asset to build a more sophisticated business strategy that results in competitive advantages. However, the Coronavirus pandemic has surely emphasized the importance of IT development, which is why so many companies are setting outsourcing to thrive in the post-pandemic world as their new objective.

Risk Mitigation

Though outsourcing of IT is a practice that many people see as risky, that idea is set to change, especially given the current market circumstances. How so? Because outsourcing can lead to sharing risks with third-party companies that can strategically partner with each other to obtain mutual benefits. By outsourcing the development of digital solutions or the maintenance of its systems, a company can reduce the risks of carrying out those tasks in-house.

The outsourcing companies, in turn, can gain strategic partners that reduce uncertainty during these trying times and beyond. If the partnership prospers, the hiring company can have key digital assets to its disposal with a reduced cost, while the outsourcing company can establish a long-standing relationship that can secure its mid-term future.

Change In Contracts

The business landscape has been shifting towards an outcome-based approach for quite a while now, so it’s expected that the pandemic will only accentuate it. Since the business landscape will be very challenging for all companies on a global scale, the cost-effectiveness of outsourcing will be more thoroughly on the radar of the hiring companies.

Thus, it’s only natural that there are changes in how contracts are established from now on. This might bring less flexibility in the procurement of the outsourcing services or the introduction of new metrics to define the impact and value of the achieved results. IT outsourcing companies will have to adapt to their circumstances to secure projects during an impacted economy, so it’s understandable if they end up aligning with this increasing demand for their performance.

Increased Agility

The sudden veer into the digital world has brought a lot of new technologies to the attention of many companies. Thus, IT outsourcing companies can expect a lot of newcomers in the field to hire them to update their systems, build new platforms based on the latest technologies, and provide consulting services to adapt to the new business scenario.

Naturally, reputable IT outsourcing companies have already been preparing for this, so they shouldn’t have a problem from a strategic standpoint. What they’ll need to work on, though, it’s how they can make sure they have the operational capacity to meet increasing demand with less flexibility. The solution might be found in revamping their agile-driven operations, thus augmenting the development speed while keeping the quality standards on a high threshold.

The Ever-Growing Presence Of Nearshoring

While not a direct result of the pandemic, the increasing presence of nearshore companies in the IT outsourcing scenario has certainly benefited from the crisis. Traditionally, companies have outsourced IT services to offshore partners (mainly located in far-off places like India and China) that could guarantee a significant cost reduction.

However just cutting costs isn’t a sound strategy in this delicate scenario, which is why a lot of companies will turn to nearshore development companies to fulfill their IT outsourcing needs. The main beneficiaries of this shift will be regions like Latin America and countries like Poland and Ukraine, which will increasingly serve companies in the US and Europe, respectively.

Some Final Words

Since we’re living in a highly dynamic scenario, it’s probable that even some of these trends will look very different by 2021. That’s perhaps the most relevant phenomenon when it comes to outsourcing during 2020 – things are changing fast and the only IT outsourcing companies that will succeed will be the ones that keep a close eye to the ever-changing trends and evolve with them.