Technology is continuously evolving at such a rapid rate – it is impossible to predict with any certainty how it will impact on our lives in coming years. When people make predictions about how technology will evolve, try this exercise. Look back ten years and think of all the technologies you take for granted today: social networks, smart phones, mobile Internet, tablet computing. None of them existed even a decade ago – or were so nascent an elite few were the only users.
Think back a decade more and you will find yourself at the birth of the web. Adverts for major consumer products did not even feature URLs until the late 1990s. Now you see how difficult it is to predict what technologies will be common by 2015.
There will always be winners and losers in the search for new ways to use technology to achieve business success. The downfall of companies such as Nokia, Kodak, and Blackberry illustrate the consequences of not understanding how society is changing and using new technologies.
But one development that is likely to evolve further is technology outsourcing. As the world becomes more complex, it is even more unlikely that companies will retain the right kind of expertise internally. IT services will be outsourced more often because only the IT companies understand the complex technological solutions – rather than some of the drivers we saw a decade ago, such as labour arbitrage.
The globalization of IT is itself becoming more complex anyway. There are still IT service companies all over the world offering their services, but now they don’t always need to directly contract with a customer to provide a specific service. The cloud-based model allows service providers to offer a specific service – storage or computing power – that can be turned on and off as desired. The app store model many people use on their phone can also be used in the enterprise to create an environment where end users on the business front-end (not the IT department) can choose and install technology solutions themselves.
Change is taking place fast in the IT services market and nobody can predict how it will look in ten years, but one thing is for certain, IT experts need to offer a variety of delivery methods because enterprise IT is borrowing many of the ideas that consumers are already familiar with.
As the economy develops, old jobs vanish and new ones are created. This process has always taken place as technology creates new needs and old skills are replaced. Just consider how important the blacksmith used to be before cars were commonly used and if someone described themselves as a blogger or flash developer in 1985 it would have made no sense – times change.
Big Data is another of these major changes. Not just in the sense that we are becoming able to analyse larger sets of data thanks to the technology becoming faster and more powerful – especially with more memory being available, but because the ability to do this work is now a skill itself. Understanding Big Data and being able to manipulate and analyse large sets of data is a popular skill to be exploring now as every analyst predicts that Big Data use is set to explode in the coming years.
The analyst firm IDC wrote a study in 2012 that predicted the amount of data available to analyse would increase 50 times by 2020. This prediction remains true – if anything it may be even more by 2020 as new applications that create data are launched all the time – from smart watches to other wearable technologies.
All this has led to a fear that there will not be enough people available to work on Big Data projects. McKinsey believes that the US will need almost 200,000 new data scientists by 2018 and the British Royal Academy of Engineering has predicted a need for 1.25 million graduates in science and technology subjects by 2020.
A recent column in the British ‘Daily Telegraph’ claimed that this shortfall in data scientists might even be a threat to the future of business. But what all these concerns in the UK and US often fail to acknowledge is that there are many other countries with an abundance of data scientists.
Offshore outsourcing has been long proven as a strategy for software development and other IT requirements. It will be exactly the same once data science becomes a mainstream part of every business. And companies like IBA Group are already doing it today.
Earlier this year at the World Economic Forum in Davos British Prime Minister David Cameron gave a speech that highlighted reshoring as a key objective of his government. In his speech Cameron said:
“In recent years there has been a practice of offshoring where companies move production facilities to low cost countries. We’ve all seen it. We all know it’s true. And it will continue.
But there is now an opportunity for the reverse: there is now an opportunity for some of those jobs to come back.”
Cameron focused mainly on the manufacturing sector. He cited examples such as the Horby model company bring production back from India to the UK and Raspberry Pi computers moving production to Wales.
What he said makes sense for these companies. By reducing the complexity in a manufacturing supply chain there is the opportunity for these companies to react faster to the market than if their products needed to be ordered many months before delivery.
Cameron went on to acknowledge that this is not a simple argument. He is not describing an ‘us’ v ‘them’ world:
“…I’m not saying there is a finite number of jobs in the world and that our success depends on some kind of tug of war to win them back at the expense of the East.”
But Cameron’s concept of reshoring is very focused on companies and processes that require a physical product delivery. He talked about call centre jobs moving closer to home, but the change in call centre strategy over the past decade has been well documented – people prefer to have their calls answered closer to home.
For many other professional services there is effectively now a global market. Graphic designers, advertising, accounting, and IT professionals are now operating within a global community of expertise and with instant delivery of products via the Internet there is no supply chain difficulty.
So it doesn’t seem like the UK government focus on reshoring will affect those companies or individuals supplying technology expertise. These services are usually sold based on the expertise required, not simply on a low price alone – allowing a global search for the best possible skills wherever they may be found.
Offshore outsourcing (often called offshoring) often gets a bad press. Many people assume that offshoring must be all about finding the lowest cost service and therefore the world is engaged in an endless race to the bottom, searching for lower and lower costs.
It’s not like that at all. An interesting article in the business magazine Forbes challenges the conventional wisdom on outsourcing. For instance, even though the US and Europe account for about half the economic activity of the entire world, only about 10% of the global population lives in these two regions.
This means that there are an enormous number of highly skilled people outside the wealthiest nations on earth. Working with this talent is essential because of the difficulties involved in finding these people locally.
And many companies are more globally oriented today. If you wanted a new logo designed in the past then it would be done by a local designer, now it’s done anywhere in the world based on finding a designer you like. Any intellectual task can now be performed anywhere in the world so the issue today for companies of all sizes is that if you are not working globally then how are you finding enough skilled resource to keep you ahead of the game?
And finding the right talent to support your team back in headquarters is only half the story. If you want to expand to new markets, what could be better than working with a team of people in those new markets to give you a footprint and a first step into the new region?
Offshoring has often been misrepresented, but it is now an essential part of corporate strategy that aims at making the skills of the entire world available to clients, wherever they are located.
Another Nasscom conference is over. This annual event in Mumbai, India, has grown into the largest and possibly most important outsourcing event in the world, with over 35 countries represented and promoted – much more than just an India-only event.
There were several formal presentations representing the advantages of a number of different world regions. These included: Colombia, Poland, Germany, UK, South Africa, MENA (Middle-East and North Africa), and Africa in general.
The conference was organised some time ago, so it was interesting to see how the political changes in the news were affecting presentations that were supposed to be only positive. The MENA presentations in particular suffered from the various democratic challenges sweeping the region. But what was interesting to note was how presentations from established regions such as South Africa were so negatively received.
South Africa made a strong play over accent. They claimed to have the most attractive accent for voice agents in the offshore outsourcing market, yet there was very little else to support their claims. Even academics were leaving their session wondering what happened to the previously significant contact centre industry in that region.
Though Poland was the only Central and Eastern European nation actually presenting on the main agenda, they became grouped with both the UK and Germany. All EU nations and all focused far more on the availability of skills, flexibility, and knowledge than just low-cost workers.
The market for offshore outsourcing has changed and matured, so it’s good to see regions such as Poland now aligning their offering with Western Europe. The wider EU has a strong case when pitching for hi-tech work – customers and suppliers have moved on.
I found myself featured recently in the pages of the Financial Times talking about offshoring to various locations, particularly when the British government is the client.
Naturally enough, as the government is undergoing a large-scale austerity programme and working hard on cost reduction across all services, the offshore outsourcing of services such as IT is being discussed far more than it was a year ago.
There are several dynamics at play in the British example. The emphasis on cost reduction rather than service innovation, a need to focus on security and risk of delivery failure, and a potential emphasis on the EU being the location of choice for many services.
The government CIO, John Suffolk, recently tendered his resignation and a replacement has yet to be announced. Suffolk was focused on changing government IT services to be more like the Apple App store, more like a cloud of public sector services. Many in government felt that these conceptual ideas for IT services would never work on such a grand scale in the public sector, and his resignation is a surprise to those who thought he was now in a strong position to change IT across the entire government.
It’s clear that the emphasis of the politicians is certainly on cost reduction for the foreseeable future and many analysts have commented that there is distaste for many of the usual suppliers, seen as bloated and too expensive. With a new vista of opportunity and a readiness to explore new partners, but a requirement to almost certainly only engage with services delivered from within the EU, this surely opens a new range of possibilities for the technology firms from Eastern Europe. If they can build the right relationships in the UK then they will find a rich seam of opportunity awaits them.