Trends in software outsourcing this year, 2016

We have seen software outsourcing companies welcoming increased standardization and cloud computing

We have seen software outsourcing companies welcoming increased standardization and cloud computing options of all flavors, use their influence to renegotiate or rebid their deals, and settle into a best-of-breed approach to offshore outsourcing.

 Let’s look at some trends in outsourcing industry in this year:

Security becomes the epicenter

Security is on the mind from the boardroom to the break room, and it will impact outsourcing strategy in 2016. Certainly, security risk is poised to increase as telematics and the IoT becomes more prevalent in consumer and commercial products. Growing numbers of threat actors will use more and more creative ways to exploit weaknesses, often with devastating effect. Regulators will exact gradually large fines for poor security. Service providers have often been the weakest link in a company’s security and will need to find improved ways to address that concern.

The threat profile changes every day and with every additional protection comes a new weakness, not to mention it is becoming harder and harder to tie products together to deliver a robust security solution. This year, we expect to see the upsurge of the Chief Security Officer and more companies opting for specialized security vendors with Security-as-a-Service capabilities that can protect data no matter where it exists.

Offshore captives strike back

Companies will influence the experience they have gained in process maturity as a consequence of working with outsourced offshore teams and set up their own shops, predicts the objective of this tactic will be cost cutting by taking away the provider’s margin, as well as increase flexibility by removing contractual constraints. Rather than insourcing as a knee-jerk reaction to a bad outsourcing relationship and repeating previous mistakes, clients will benefit from lessons learnt and be smarter about what and how they exile.

Production workloads – hit the cloud

There’s no denial that Amazon’s first mover advantage with the public cloud. And IT shops who reached for the cloud first did so with trivial systems. But in this year, we’ll see more production workloads move to the cloud—and not just AWS. No CIO (Chief Information Officer) wants to tie up with just one cloud provider. IT pros recognize that the future of their data centers will symbolize many platforms, so we’ll start to see more CIOs experiment with other key public cloud options, such as Microsoft Azure and Google Cloud Platform.

The potential to move outsourcing from the ‘lift and shift’ of trivial processes to something more substantial is entirely doable in the cloud. The as-a-service outsourcing model makes it likely to combine infrastructure, software, and business process to create a platform that is much more segmental, scalable and intellectual. This platform can handle higher-level processes, creating results that increase revenues, improve profit margins, enhance customer service, and move the business ahead instead of running in place.

VMOs go conventional

Multi-sourcing has amplified the vendor management workload. As clients look for ways to address the challenges of managing ever more complex multi-vendor service delivery models, the VMO will establish itself as a way to provide a high-level, organization-wide view while at the same time managing day-to-day operational details and multiple touch points between different providers in the service delivery chain.

Integration challenges the flow

Customers adopting a great number of evolving digital technologies will face an ever-larger integration challenge. Many of the most powerful cloud technologies will require integration struggles comparable to those required to install ERP systems. As most software outsourcing companies in India do not have employees who are able to manage multiple emerging technology platforms, they’ll have to outsource service integration, change management and incident management. So we expect increasing partnerships among providers.

The service providers universe develops

Customers will buy from a growing list of technology providers. Customers will continue to turn to ITO, BPO, KPO, software outsourcing companies in India and cloud service providers who have radiated a digital trail for assisting in becoming digital businesses. They will source services from an ever-expanding list of evolving and digital technology providers. We’ll see more product-driven managed services as more product-oriented vendors, such as Cisco and others, move ahead than just selling their products to also delivering services around their products. We are already seeing this on a small scale, but expect it to rise this year as very large clients are growing their managed services capabilities.

Automation will reinvent relationships

Having shattered the opportunities to move work to lower-cost people, IT Outsourcing companies and BPO companies put their emphasis now on moving it to machines. Buyers with agreements designed to purchase people will need to settle their contracts to this new world. Both customers and providers will have to reconsider their deals as they integrate more RPA into IT service delivery.

Both parties will have to redefine roles and skills necessities for human jobs, as well as manage the touch points between automation functions and jobs performed by humans. This will present a substantial challenge for outsourcing relationships as agreements will need to be flexible to house these highly dynamic environments.

Agile sourcing emerges

With technology itself seeming to advance gradually, outsourcing decision making will have to speed up. Software outsourcing companies India who decide on a digital strategy will execute quickly in this year to avoid seeing a technology shift or an opponent jumping ahead. We see growing numbers of clients deploying substantial negotiating teams working on an agile basis to close smart deals quickly.