The reason why the future of the outsourcing industry lies on driving business outcomes

The convergence of big data, social media, software, cloud and device has cause unprecedented disruption across all industries. Corporate giants such as Borders, Blockbuster and Kodak often have been examples of this after crumbling the competition from Netflix, Amazon and Shutterfly respectively. In a world where there is a myriad of mobile devices, where social media could bring down mega companies and governments, the capabilities of software are no longer nice-to-have; they have become necessities and are essential for growth and survival. 

The software outsourcing market is believed to exponentially grow this year due to three megatrends, which are the following:

• ISVs and technology organizations are racing to create their product mobile, cloud and social media ready
• Traditional firms are transforming into digital organizations
• The internet of things, new software-enabled businesses are disrupting value chains across different fields

Most companies, which include traditional information technology vendors lack the mindset and skills necessary to enable high velocity, complex, mission vital programs. That is why, they would look for partners who could help in delivering bespoke, highly complicated product development programs. These need a product-centered approach and a wider portfolio of skills, including user experience, global agile development, integration and the ability to design ultra scalable and secure architectures. Outsourcing specialist firms are positioned in a unique manner to deliver value in the changing paradigm toward more innovation and open models.

The outsourcing industry is changing constantly. Moreover, while the best practices from the past could certainly be a big advantage for vendors, companies should evolve to be more flexible in order to fit in the need of the market at present. Whether it is co-investing in a product line or growing an internal practice for better delivery of next-generation technologies, service providers should innovate to stay competitive. Based on a survey, up to one-third of the top firms in each industry would be challenged as existing or new entrants use social media, cloud, mobile and analytics to alter the processes or pricing of the industry. Enterprises that comprehend this and would act on it would grow, those that do not would have a difficult time staying afloat. Customers will increasingly look for specialized partners to drive innovation at the physical-digital convergence.

The process if very controversial and affects each and every facet of business, from manufacturing to designing, development of software, management of logistics, financial control, sales and customer support. Outsourcing has been praised as efficient, cost-effective, strategic and productive. Moreover, the process is also condemned as money-grabbing, evil, ruthless, destructive, exploiting the poor, destroying nations and communities. The incentives are great, and could lead to drops in the costs of the job from fifty to sixty percent. Up to half of the money spent each year by European organizations on administration and sales can be outsourced. Regardless of the publicity, sourcing is most often to organizations in the same country.

New sourcing decisions could generate weeks of widespread protests, unfriendly media coverage, as well as industrial action. The issue is very sensitive that decisions usually are taken behind closed doors at an organization's most senior levels. Moreover, they are announced only after a lot of careful research into how proposals are likely to be received. If handled incorrectly, BPO or business process outsourcing could damage the corporate image, unsettle customers, weaken a product or brand and could result in lower quality products as well as services. Nevertheless, when handled well, the results could be good enough to save a failing company, depending on the situation.

It is clear that the offshore option provides immediate cost savings. Firms are getting more adept, experienced and confident in remotely managing their processes, whether by a vendor or their own center. These days, more and more enterprises are obsessed with driving out cost and figuring out things such as transformation of processes at some point in time. The difference these days however, is that most of the perceived risks of moving to a different country has gone. Moreover, enterprises simply are doing it as part of their daily operations.

With the industry emerging from the aftermath of the recent worldwide recession, there are several trends that provide a glimpse of what is in store for the future of the field.

➢ Consumers and buyers would seek more standardized solutions from their engagements, thus they would have to differentiate themselves via performance instead of pricing. Thus, pricing structures would be stabilized to some extent
➢ Analysts predict that the industry would continue to fight short-term expense pressures, and there would be pressure on the service vendors for more flexible pricing contracts
➢ Sharing critical business and information technology service has been proven to lower costs, minimize errors and boost productivity
➢ Better quality control and minimized back-office expenses are being set up and this trend would continue
➢ Consumption-based technologies delivered via the cloud would grow, since they are cost effective

Software Outsourcing to India would continue to be the major benefit because of the fact that it has been able to evolve with the changing requirements of customers all over the world. NASSCOM, the apex body of the country's premier IT service and software companies, reported that the country's share in the global market increased from fifty-one in 2009 to fifty-five in 2010. It still stands out for its customer efficiency and offering. Nowadays, clients are not after cost-effective solutions but also for enhanced productivity, skilled staff, business process excellence and service quality. India's large population and multiple-skilled people would continue to be preferred by service seekers on a global scale.

The financial rewards, economies of scale and the flexibility and increased productivity promised by the process would be a hot commodity for many years, as the skyrocketing rates of increased sourcing affect each and every segment of society. Focused initially on highly transactional back-office processes or non-vital services, it now covers strategic functionalities, with some firms off-loading whole segments of their value chain. As it exponentially spreads all over the world, issues that do not exist yet would arise inevitably. It would be wise to monitor trends and developments and build standardized solutions to help all stakeholders look for a way around or over the obstacles along the path.

Determining if the outsourcing industry would continue to grow in the coming years and in the future

Outsourcing, which begun in the early 90's, is considered a revolutionary phenomenon of sending work from a developed country to a developing one. It has experienced remarkable growth in the past decade. These days, after over ten years, its success is being questioned. Will its advantages overshadowed by rising offshore costs and government pressures? The experts in the industry feel that the outsourcing future would remain securely mainly because of the numerous benefits that it brings to both the buyer and the service provider. The benefits are manifold, the most important the cost savings and better infrastructure. These lead to the sustained growth of the process.

Thorough consideration and careful assessment of the different offshore sourcing trends revealed that the process would grow continuously because of several reasons, which include the following:

IT WOULD HAVE MORE FOCUS ON CORE BUSINESS TASKS

The current trends point to the major change of focus from the transferring of non-critical services to transferring core functions. Most organizations, with a considerable number of SMEs, are taking into consideration fully sourcing their information technology department, not just to save money but most of all to gain better skilled and experienced specialists for creating high quality solutions. Moving tasks to India, particularly information technology is growing because of the abundance of qualified professionals in the country with skills, methodologies and resources to make superior results.

STANDARDIZED SOLUTIONS WOULD BE FAVORED COMPARED TO CUSTOMIZATION

Another trend that would affect the future of the industry is the move to standardization of solutions. The recent economic crisis has led to enterprises favoring standardized answers over custom ones which are more costly. Organizations prefer using the dollars they saved for acquiring new clients and to think out new concepts. This led to companies sourcing to other locations more than willing to move a standardized method of working for non-core tasks. With the great pressure of keeping costs down, vendors would rely more heavily also on mass automation tools that would create further opportunities and minimize the staff necessary for supporting critical applications.

SAVINGS ON MONEY WOULD CONTINUE AS A MAJOR ADVANTAGE

In the early years, one of the key benefits of outsourcing was the huge difference in cost. Businesses were able to reduce their overall expenses significantly by paying less than half of the amount in salaries to their offshore partners. During the late 90's, most experts predicted that cost on savings will no longer be one of the main advantages because of the rising cost of living as well as advancements in technology. However, the financial woes during the years 2008 and 2009 have made the entire concept even more important. With the recovery still uncertain, the cutting on costs remains one of the main reasons to outsource.

OUTSOURCING AND CLOUD WOULD MERGE AND GROW

Industry experts predict that cloud would soon merge with the current market and provide better opportunities for the whole field. With business in general pushing towards cloud solutions for various reasons such as scalability, flexibility and savings, outsourced IT offerings would be needed for migration of current services and infrastructure in order to make the cloud enabled. This would benefit infrastructures supported by the computing system as well as other providers.

SMALLER PROJECTS SOURCING WILL REMAIN AN IMPORTANT BENEFIT

The future would witness a boost in the transferring of smaller projects. Even though big corporate homes will still outsource large projects to major vendors, there would be a boost in smaller buyers or customers who would be looking for specialized and flexible smaller providers to support them in realizing new concepts. The benefit of the process would be even more applicable to individuals and entrepreneurs who have spent years watching from the sidelines and now want to benefit from a piece of the action. The transfer of smaller tasks would help companies, particularly those who are looking towards the process as a way of reviving their businesses as the economy makes a rebound.

In general, the practice is expected to dramatically increase in the future. This is due to globalization, which links the economies of the world, which leaves no room for individualism. Enterprises would not be able to meet the different challenges that they face solely rely on their own internal resources but would have to see beyond for more cost-efficient and capable sources. This is where the industry and the numerous advantages that it brings play a very crucial role.

More than a decade has passed and numerous newly raised enterprises have also gained a lot of fame, name and revenue with the system. It is a system to grow itself and to develop others as well. At present, businesses prefer it as the technicality involved a lot of time and capital investment too. Several issues are before the entrepreneurs such as automating data, transportation, security management, account maintenance, labor, raw material, access control, marketing, telecommunications and accommodation among others. All of these involve more than sixty percent of the capital investment. In order to make more savings, every business owner opts for transferring the jobs.

Vendors are thoroughly equipped with different services as well as having expertise to provide it in the shortest possible time. The reputation of a lot of BPOs is more than the industries. Gone are the days when the BPOs were used only as call centers. These days, they man an industry that is fully capable of handling and running another field. Not just the field, but a lot of firms like government agencies, banks, business houses, huge firms, sports sector, educational institutions, transportation, electricity, water, agricultural and a whole lot more of sectors are the work area for the BPOs. If they do not outsource, they could not run at their own caliber.

Regardless of offshoring or in a domestic setting, the nature is the same and the reduction on operational expenses is the same. Every entrepreneur would prefer a lower investment and availing of the rest of the services from the vendors since the same are available on a professional basis. The method also provides ample time for managing the major aspects of the business and so it is clear that the future is bright and would definitely continue for many years.