Uncategorized How Outsourcing Practices Are Changing in 2021: an Industry Insight – InfoQ.com
Live Webinar and Q&A: API Gateway Use Cases for Kubernetes (Mar 3rd, 2022) Register Now
Facilitating the spread of knowledge and innovation in professional software development
Justin Lee goes over a number of frameworks and libraries available for Kotlin development and not once have to touch the Android emulator.
What is the single best API technology you should always use? Thomas Betts moderated the discussion, with the goal to understand some of the high-level features and capabilities of three popular technologies for implementing APIs. The discussion covers some of the pros and cons of GraphQL and gRPC, and why you might use them instead of a RESTful API.
In this article, author Juan Pan discusses the data sharding architecture patterns in a distributed database system. She explains how Apache ShardingSphere project solves the data sharding challenges. Also discussed are two practical examples of how to create a distributed database and an encrypted table with DistSQL.
In this podcast, Shane Hastie, Lead Editor for Culture & Methods, spoke to Kevin Boyle about bringing DevOps culture practices and tools into low-code and no-code environments.
Change Intelligence is often a missing component in incident management. Successfully correlating monitoring and observability data to arrive allows engineers to arrive at the root cause more rapidly. Telemetry provides the building blocks that enable change intelligence to identify and map the root cause, based on changes in the system and their broader impact.
How do traditional security approaches scale in Cloud Native architectures? Register Now!
Learn from practitioners driving innovation and change in software. Attend in-person on April 4-6, 2022.
Uncover emerging trends and practices from software leaders. Attend online on May 10-20, 2022.
Your monthly guide to all the topics, technologies and techniques that every professional needs to know about. Subscribe for free.
InfoQ Homepage Articles How Outsourcing Practices Are Changing in 2021: an Industry Insight
Jul 02, 2021 9 min read
by
reviewed by
2020 wasn’t an easy year for most businesses. It highlighted the many gaps in their preparedness for disruptive times. Many businesses came to a standstill while others saw their operations, sales, and business relations decreasing.
No one had expected the sudden challenges, surprises, and disruptions that 2020 had in store for businesses across all industry verticals. The impact of the pandemic is still undeterred in several sectors. And the outsourcing industry is no different.
The second quarter of 2020 saw several outsourcing contracts canceled or coming to a halt. However, there was a pressing need to continue operations and stay competitive despite the uncertainty. Through the second half of the year, businesses started regaining trust in outsourcing companies and renewed their contracts with the main focus on business continuity and risk management.
Developer Workshop: Module 2 – CI/CD Pipelines.
Join experts to learn how to implement well-engineered CI/CD pipelines that consider governance and traceability from idea to production. Watch Now!
In 2021, while some of the changes of the past year are reflecting in current outsourcing practices, there are some new trends visible in the industry.
After some in-depth research of the latest studies, here is my analysis of how outsourcing practices are changing in 2021.
The COVID-19 pandemic ushered in a digital revolution with a majority of the businesses undertaking five years’ worth of digital transformation within a few months. However, with the increased shift to digital, exposure to cyber-attacks also increased. A survey by Syntax revealed that most IT leaders and decision-makers are dissatisfied with their current security tools and practices. Out of the total 500 decision-makers surveyed, 83% plan to move their security teams from in-house to a managed service provider (MSP). -1625120610636.png)
Ever since the pandemic, cybersecurity attacks have worsened. Over 77% of leaders experienced regular cybersecurity attacks since March 2020. And as they scaled their digital transformation initiatives, the threats escalated. IT leaders want all levels of their organization’s security to improve—employee training, cloud, business continuity, and disaster recovery—not just the business level.
56% of the leaders even plan to invest over 40% of their overall budget on improving cybersecurity by outsourcing it to managed service providers. Most companies plan to purchase threat intelligence, bot detection, and vulnerability scanning from MSPs.
In fact, outsourcing security functions has become so popular that by 2022 the MSP market is expected to reach $41 billion. IT outsourcing companies will gear up to offer better security services, security architecture, and security strategy to protect all important data in this age of digital transformation.
One thing on every organizations’ mind during 2020 was to recover from the dark phase of low business. But more than disaster recovery, they had to respond to the fluctuations in business growth and be focused on business continuity.
They need to react, remodel, and return to business in the “new normal” which is touted to be financially risky. Whether it was onshore, nearshore, or offshore, business continuity compelled every business to carry on with outsourcing relationships, but with some new provisions or policy changes.
Businesses have started looking for outsourcing contracts that have provisions for lockdowns or global uncertainties where the world comes to a standstill.
No matter how hesitant, confused, or scared startups, enterprises, or SMBs were, they continued getting their products built to digitally transform and avoid becoming a thing of the past. They enhanced their outsourcing relationships to keep their businesses afloat and ready for any future disruption.
hen choosing the vendor or outsourcing partner, business continuity will be the top priority. In addition to the usual factors in assessing an IT outsourcing company, businesses are also looking at their ability to deliver from home with complete data security.
The tech ecosystem had already embraced the Fourth Industrial Revolution in terms of advancing technologies. But the outsourcing community was still a step behind. It still relied on humans for the majority of work. As the pandemic ushered in the future of work, outsourcing changed. A new digital outsourcing model emerged to help outsourcing approaches be at par with the Fourth Industrial Revolution.
As the majority of businesses have embraced the technology revolution, outsourcers are also gearing up for the same. These technologies in outsourcing will enable both parties to become more flexible, resilient, efficient, and productive while driving stable revenue. More organizations are strategically incorporating these evolving technologies into their policies in the coming times. Some of the technologies we can see being incorporated into outsource services are:
Most readers think about environment-friendly outsourcing practices when hearing the term sustainable outsourcing. However, here, we aren’t talking about that aspect of outsourcing. Instead, we are talking about sustainability in general—practices that satisfy present needs without compromising with future needs.
Businesses are now looking forward to more sustainable practices in outsourcing to continue having a long-term relationship. The pandemic forced businesses to revoke their outsourcing contracts with companies mostly because they couldn’t trust their project during uncertain times. Moving forward, businesses are more focused on building strategic partnerships or value networks with outsourcing service providers to ensure continuity.
These outsourcing relationships will be different from the current approach. They wouldn’t just be focused on the current project but a larger partnership. The Senior VP of a large outsourcing company says, “Clients don’t need classic vendor management. They want vendor management that can understand technology, understand the start-up ecosystem, help find solutions for the business, and manage internal stakeholders.”
Two firms, the outsourcing service provider and the buyer, come together to form a valuable relationship. It will no longer be a short-term solution. The buyer sets up goals with all the risks, changes, and requirements in mind, then builds and chooses the right outsourcing strategy based on that. They join hands as strategic partners to build stronger, long-lasting relationships.
There are three ways to outsource: offshore, onshore, and nearshore. Earlier, offshore was the most popular way to outsource. However, last year changed that to a large degree. The majority of the outsourcing destinations like India were in complete lockdown and many IT companies were shut. Businesses became reluctant and revoked the majority of the projects back and looked for companies near them. This increased the popularity of nearshoring.
Nearshoring is a form of outsourcing where companies partner with a service provider located in a country near theirs. It should be a different country but the same region. For example, if you are based in Australia, you outsource to New Zealand. While nearshoring offers the same benefits, the cost will remain a challenge. That’s why many companies opted for offshoring. However, considering the technology evolution in such countries and to mitigate risks, companies are now looking for talent within their region. This, in turn, is leading to a sudden boom in nearshoring.
Countries like Bosnia & Herzegovina soon became a nearshoring Mecca, for countries in Western Europe. The pandemic opened doors to new opportunities for such countries. The location, near-native language capabilities, and cultural familiarity made more people shift towards nearshoring. Similar instances were seen in Latin American countries like Mexico and Columbia appealed to companies from the United States for large-scale nearshoring.
In the coming months, there will be a sharp increase in nearshoring opportunities for companies in regions like Eastern Europe, Latin America, and the like.
Outsourcing started as a way to reduce operational costs. However, with time, factors like quality, talent shortage, IT infrastructure, speed, etc., became the driving forces for outsourcing. Cost became an ancillary benefit for other reasons. In a 2018 Deloitte survey, cost was no longer the key objective to outsource. It was overtaken by faster time to market, flexibility to scale, competitive edge, and better user experience.
However, the 2020 survey shows that reducing operating costs is becoming a critical factor once again. Businesses are now choosing their outsourcing partner based on the extent of cost reduction. This is mainly because of the economic uncertainty caused by the COVID-19 pandemic. 
Flexibility, agility, scalability, and technology enablement are top concerns. However, cost holds the power to make or break an outsourcing relationship. The final decision to hand in the contract is once again driven by cost, no matter how much one talks about the other benefits.
Back at the start of 2020, we had anticipated a new digital outsourcing model to gain popularity but the year had other plans. The uncertainty pushed things further and new trends in the outsourcing industry came to the fore.
While the industry is embracing disruptive technologies like Artificial Intelligence, RPA, cloud enablement, outsourcing providers are also using the same to enable their partners to digitally transform. New contracts are revolving around cybersecurity and the company’s preparedness to continue delivering projects regardless of another lockdown in the future.
Despite the uncertainty of 2020 pushing it further, the digital model of outsourcing is all set to emerge. What we had expected to see by the end of 2020, we’ll be seeing the progress this year. 
Swati Sharma, an avid writer by day and an ardent reader by night, is in charge of Content Marketing at Classic Informatics, a global web development company. Owing to her passion for her profession, she loves to stay updated about the current and upcoming trends in the IT industry.
A round-up of last week’s content on InfoQ sent out every Tuesday. Join a community of over 250,000 senior developers. View an example
We protect your privacy.
You need to Register an InfoQ account or Login or login to post comments. But there’s so much more behind being registered.
Get the most out of the InfoQ experience.
Allowed html: a,b,br,blockquote,i,li,pre,u,ul,p
Allowed html: a,b,br,blockquote,i,li,pre,u,ul,p
Allowed html: a,b,br,blockquote,i,li,pre,u,ul,p
A round-up of last week’s content on InfoQ sent out every Tuesday. Join a community of over 250,000 senior developers. View an example
We protect your privacy.
QCon, the international software development conference, is returning (in-person and online) in 2022.
QCon brings together the world’s most innovative senior software engineers across multiple domains to share their real-world implementation of emerging trends and practices.
Find practical inspiration (not product pitches) from software leaders deep in the trenches creating software, scaling architectures and fine-tuning their technical leadership to help you make the right decisions. Save your spot now!
InfoQ.com and all content copyright © 2006-2022 C4Media Inc. InfoQ.com hosted at Contegix, the best ISP we’ve ever worked with.
Privacy Notice, Terms And Conditions, Cookie Policy
