Why IT Outsourcing is Back in a Big Way

It wasn’t that long ago that IT outsourcing was thought of primarily as a cost-cutting measure. Companies outsourced their IT services to specialists that had the personnel and infrastructure to run things more cheaply. It wasn’t uncommon in the 1990s and early 2000s for business leaders to characterize IT as a commodity where there was little differentiation between vendors. Like water, electricity, or other utility services, companies looked for providers that could deliver adequate IT services as inexpensively as possible.

As outdated as the flip phone

More than 20 years later, that line of thinking is as obsolete as the flip phone. Today, most business leaders believe IT is their most significant differentiator. An innovative IT infrastructure is essential in supporting a company’s digital transformation and helping an organization stand apart. But, how can organizations leap commodity IT to innovative IT? How can they be experts in everything under the IT umbrella? 

Welcome to the next-generation of IT outsourcing services. Instead of a commodity, IT partners can now help companies creatively apply IT to support high-level goals, such as growing the business, boosting the customer experience, or moving into a new market. What makes this new wave strategic partnerships work? And, how can your organization take advantage of these arrangements? Follow these guidelines.

  1. Figure out your core competencies – Companies should start by evaluating their core competencies to determine what to manage internally and what to shift to IT specialists. For example, organizations may benefit from a cloud infrastructure or any as-a-service IT options, freeing up internal IT teams to focus on compliance, mobility, or other long-term goals.  
  1. Reframe contracts where possible-  It used to be that the focus of these agreements was to minimize risk and disruption to the business. Today when setting up these contracts, look to promote innovative thinking and positively disruptive change. By aligning the contract with goals for growth, companies can expect partners to play a more prominent role in the company’s success. Keep in mind though that outcome-based pricing may work for some areas of the business better than others. An IT service provider delivering Desktop and a Service (DaaS) and network monitoring services has little control over other aspects of the company. So, an outcome-based expectation may be difficult. But, when farming out sales management customer service or cloud enablement, these areas are better candidates for ‘transformation’ results. As an example, a partner that can improve customer experiences or help deliver an omnichannel customer support program can truly transform an organization. 
  1. Don’t automatically look for one IT provider to do everything – Thanks to a rapidly expanding ‘digital technology’ market, early on providers tried to offer every technology service under the sun. Now, the specialization of services is taking over. Some partners may offer Disaster Recovery-as-a-Service (DRaaS) only, while others focus on Contact Center as-a-Service (CaaS). Having a specialized partner from the get-go may help businesses avoid mistakes or projects that start and stop.

Introducing the integrated enterprise

Many analysts and industry insiders believe outsourcing is back in a big way. Accenture calls the next-gen approach ‘The Emergence of the Virtually Integrated Enterprise’. Their recent report outlined their predictions around strategic partners and competitiveness.  

‘For instance, in the future, strategic suppliers likely will be seen as simply an extension of the company’s manufacturing or product design and development processes. If the relationship is truly intimate, suppliers could even end up assuming a fully integrated role on the product development team, participating in all internal meetings without separation alongside the company’s employees, helping to come up with next-generation products.Accenture 

If you have questions or want to learn what’s next for outsourcing, get in touch! At Outsourcive, we can help you evaluate your options, to make the best decision for your business. We can’t wait to hear from you.