Every IT professional fears outsourcing to some extent, but new thinking suggests that outsourcing may actually fade away over time, and it will be technology that makes it happen. Does that mean American jobs shipped overseas will come back? Not necessarily.
In the next five years outsourcing as we know it will disappear. The legion of Indian service providers will be sidelined or absorbed. U.S. and European companies that pioneered this corner of the high tech industry will suffer similar fates if they don’t wake up. Who will emerge as the new leaders? Google and Amazon.com, brands that we associate with search and retail, will become better known for outsourcing.
That’s because both Amazon and Google have made great strides in helping businesses move some if not all of their operations to the cloud, where apps and files can be easier to manage and maintain.
Traditionally, outsourcing companies sell customers deals that can span a decade and easily run to tens of millions of dollars. The service provider takes on the expensive, time-consuming task of building and operating the digital tools that the customer requires to vanquish the competition, often involving development of custom software to get the job done. To do that, service providers need aisles of powerful computers, armies of programmers, and lots of applications, which are housed either at the client’s site or located at a third-party data center that’s usually owned and paid for by the client but managed and maintained by the outsourcer. Accenture is a good example of the old model of outsourcing, which involves long-term contracts; customized software, legacy software, or both; and on-site systems integration work.
That’s all changing, and fast, thanks to the scalability, flexibility, efficiency, and pay-as-you-go nature of the cloud model. “It shifts the center of gravity in outsourcing from physical ownership of assets and process expertise. It focuses on the skills necessary to efficiently manage computing operations that can scale and at the same time are flexible enough to handle scores of different tasks.”
So watch for a global consolidation of tech services. Are you positioned to prosper or be pushed aside?
— Don Willmott