How Is Outsourcing Being Redefined For The Future?

by IBA Group for IBA Group
Posted on December 4, 2017

IBA Group
Mark Hillary

Outsourcing has changed so much in the past decade. When my first book about outsourcing appeared in 2004 the emphasis was largely on the cost of delivering a service. Outsourcing was a strategy used mostly to reduce the cost of doing business.

That changed over time with flexibility and access to skills becoming as important, if not more, than the cost of service. But beyond this outsourcing has changed dramatically in the past decade. The way that companies work with each other, charge for services, and the way that services are delivered – it’s all dramatically different now compared to the last decade.

Yet, when I browse the news I still run into articles like this. Here there is a comparison between nearshoring to Eastern Europe and offshoring to India. There are differences between Europe and India, but the arguments in this articles don’t really explore anything beyond saying that the IT companies in Europe are better, closer, and more reliable. It’s the same argument that has been made in favour of nearshoring for about 20 years.

Now think about these three trends that are redefining how outsourcing really works:

1.    Delivery options; are you delivering services via the cloud? Are you creating an app? Are you using Agile to create frequent upgrades?
2.    Payment options; are you offering a freemium model where the client only pays for upgrades from a basic service? Are you offering a pay as you go model where the client can ramp up and down as they choose?
3.    Partnership; the client is becoming the user and this changes the relationship from one with a master and servant to a much more equal need for partnership.

These are just three key areas of change, but they are important. The delivery model, the payment model, and the relationship between client and supplier are all dramatically changing from the types of outsourcing being described in the article I mentioned. Most IT suppliers are changing fast. They have seen this change taking place in the market and they are working with their clients to deliver services using new methods. It’s a shame that many in the trade and business press seem to still be talking about outsourcing as a way to save money, rather than a way to run your business.

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