Top 10 2016 Outsourcing trends to watch
Outsourcing has always been the forefront concern of any business that provides varied services and look at vendors to back its long term business objectives. Outsourcing trends have changed since companies from UK, US, Europe and other global locations started outsourcing their business processes to destinations such as India, Brazil, Philippines and Poland and other Asian countries. While 2015 witnessed a gradual shift in outsourcing trends from the customer as well as vendor’s perspective, year 2016 is likely to have lend more changes to subjects such customer expectation, data security, adaption to cloud and never to forget “costs”.
So while we get ready to adopt to new changes in business processes and offerings, lets take a look at Top 10 2016 outsourcing trends that are likely to drive the World Outsourcing market.
Pointer No 1: Result Oriented Approach
Gone are the days when by just lowering your quote you could win deals. To gain a long term edge over their competitors buyers are now looking at a better quality of service rather than seeking primarily cost savings. Hence, though vendors may no longer have to get skin themselves out to win a project, they will have to endure an increased pressure for results-driven outcomes. Hence it is likely that their is an increased demand of costly skilled resources with hourly billing rate, rather than monthly retainers or volume based commitments.
Pointer No 2: Horses for courses
Buyers are likely to adopt a skill specific approach going ahead. Vendors who have been offering freebies in lieu of winning the whole project are likely to face disappointment. While cost savings are a must-have, many customers now seek to minimize their capital expenditure commitments, improve the quality of services they are already sourcing, shorten their product delivery cycles and access the hard-to-find talent that can serve as a potential bottleneck for growth. This trend will prompt more customers to shop around for providers offering a better price/value ratio more often, eroding the contract renewal loyalty bonus that incumbent service providers might have enjoyed.
Pointer No 3: Cloud service providers will ignite better competition in IT infrastructure market
Cloud service providers are likely to improve the competitive quotient of the outsourcing market with customer centric approach. Service providers who move their delivery infrastructure into the cloud also happen to perform slightly better in service model innovation and agility. Those IT providers who innovate do not necessarily gain a sustainable competitive advantage, but they are more likely to try harder in areas such as client service. Therefore, providers who are embracing the changes in the infrastructure technology landscape are also likely to remain competitive.
Pointer No 4: Moving towards a centralized system
The reason for having a centralized service delivery system is to remove the ever increasing dependencies on multiple stakeholders. Multinational companies are looking to break their internal IT operations develop their entire IT capabilities into a single service center serving all internal departments. The implication for service providers is that they need to adapt and blend into the exceedingly networked global service delivery ecosystem, providing a variety of services to a number of end users: 24/7 and globally.
Pointer No 5: Cloud, is not game changer yet
Migration to cloud isn’t going to be the talking point when it comes 2016 Outsourcing trends. Owing to issues such as data security service providers aren’t moving to the cloud fast enough.Hence, customer adoption of cloud technologies would remain an silent entity as far as 2016 is concerned.
Pointer No 6: Reason for cloud ignorance
In continuation to the point number 5, the #1 reason for cloud ignorance remains the security and privacy fears. Because security is so difficult to pin down, most enterprises have adopted a wait-and-see approach to cloud adoption. This is why the focus on security and reliability over traditional hardware-based systems is the most promising route for cloud service providers.
Pointer No 7: Reducing multiple suppliers
Today, a major worrying factor for clients is on reducing the management cost in managing multiple vendors. The problem is more serious if multiple vendors are employed to a single project meaning that you have multiple threats to deal with and even if a single vendor non-delivers the whole delivery may get stalled. Hence, suppliers will be pushed to provide more tailored solutions. It may also happen that some of the suppliers may even get dropped altogether as companies seek to streamline operations. On a positive note, companies with a rich talent base may become a part of big projects.
Pointer No 8: Close proximity to Public sector clients
With public sector reforms on the push coupled with enormous business potential that they carry, Service providers are expected to have a sizeable local footprint when providing services to the public sector. Offshore and nearshore providers will grow their global presence to locate delivery centers closer to their customers.
Pointer No 9: Emergence of Regional service providers
Regional service providers are likely to grow providing a stiff competition to outsourcing landscapes such as India, Brazil, Philippines and Poland who lead the ranks of the top 3 most popular outsourcing locations. Regional service providers specialization and availability are likely to play a greater role as competition continues to influence the global ICT services landscape.
Pointer No 10: Client service will continue to be the major focus point
Statistics say that clients located at the US, Europe, Asia Pacific and Middle East, are still not very happy with the service that they are getting from their vendors. Going ahead, service providers delivering faster response times, more tailored service offerings and service-oriented personnel improvements are likely to be more successful compared to their peers who compete solely on lower cost.
So these were the top 10 2016 outsourcing trends to keep an eye on while you look for a smooth outsourcing strategy for your company.
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