A discussion about the reckoning for old IT services and outsourcing organizations

Outsourcing as an idea has been around for many years. The difference is that now it has gained more popularity among companies and organizations anywhere in the world. It basically means availing of the services of a third party vendor either in a local scene or in the international scenario to do the project or task that the company could not handle or do not have the hours and resources to do so, or decides to transfer to more skilled individuals. Its main goal in the past was to cut on cost, however, today it is also all about reaping the benefits of strategic methods like access to skilled expertise, minimizing overhead, boosting efficiency, reducing turnaround time, flexible staffing and more.

Nowadays, the biggest information technology and outsourcing companies could be in for the roughest adjustment they have witnessed in years. Almost certainly, they would have to shed information centers and thousands of workers even. So, why is this happening? There are three main forces that are undergoing change these days, software customers, vendors and Information Technology in general. Today might be considered as the end of the industrial information technology era. The industrial age enabled huge leaps forward in efficiency and productivity. It brought another wave of process enhancements and productivity to companies. The cost of most firms' back office functions dropped from 4 percent total revenues to 1 percent. The era surely helped drive down expenses, boost business results and more.

However, the organizations that used IT tools had plenty of baggage. They had their own content centers, their bespoke or on-premise app software and others. Moreover, they had to have staff to repair this daily. Industrial IT era firms had an entire infrastructure dedicated to the on-premises plant and equipment. The integrators of the last decades didn't define the era; they just existed to add some incremental value to the space. Transformational outsourcing is going to change that. Customers have changed fundamentally and the cloud solutions will hasten the change. Clients want to be rid of IT debt, which keeps accumulating each time a freeware user defers a maintenance or update activity.

They also want to be rid of regression testing of interfaces and integrations every time a vendor issues a new release. Buyers want integrators to connect more and more of the new computing system to other system solutions. More consumers today no longer want to run their own centers and they do not want to be in the app maintenance business too. Businesses these days no longer see the value of having their own massive data places or patching code. They expect commodity-priced big scale clouds are products that are premium-priced which do not add much, if any incremental value. To a client, they are extravagances that must be avoided.

On the other hand, outsourcing vendors changed as well. They want organizations that:

• bring a whole new set of value creators to the mix
• build deep horizontal or vertical modules through the provider's PaaS or platform as a service
• have a huge pool of seasoned or talented cloud professionals
• enhance instead of detract from the provider's brand
• create large opportunities for the seller and not vice versa

Service seekers will not need all those people intensive, massive offshore info locations anymore. The app freeware sellers would provide these as part of their cloud offerings. Nevertheless, some capacity for locations will exist and it would take a few years for clients to wean themselves of these. However, customer stickiness will not rest in a package product. If customer usage of the locations lasts at all, it would be for custom apps or integrator-created. This could pose numerous issues for outsourcers and integrators. Clearly, they will have a lot of excess computing capacity in the centers together with possibly a lot of excess talent as well. The equipment may be phased out later on, but the people would be a huge challenge.

Clients will not require plenty of the traditional implementation skills in analytic, cloud, mobile, in-memory, big content, etc. Instead, they want people who possess various skills. They want:

• those with insight to new management science approaches, particularly those using non-transactional data such as external huge data feeds
• people who know businesses genuinely
• those with true social science chops
• personnel who could design different processes radically, the process which are primarily fueled by data that is sourced outside the traditional freeware databases
• major league analytic experts

Service seekers would likely favor consultancies which are:

• populated with plenty of deep, real subject matter experts, not merely a bunch of raw 'freshers' straight out of school
• not burdened with costly data locations
• comprise of radically different members of a team who could bring social science, technology, design as well as other skills together in order to build all-new applications and processes that never existed before. 
• unencumbered with unchargeable generic individuals

The messages of some major cloud app vendors appear off-target for the contemporary corporation. They think the market requires:

• application implementation
• strategic transformation of a function
• release management
• app maintenance
• business process outsourcing
• business procedure transformation
• optimizing freeware
• health assessment
• process transformation that is strategic
• technology roadmap, process and more

Definitely, some of the items above could be helpful, but most are old generic standards. These aren't services which were re-invented or re-imagined for the post IT industrial era. No, these are old offerings that have new wrappings and nothing more. Those who are seeking outsourcing services these days would want to do more with corporations and firms that seriously rethink their role in a world of new offerings. There are several providers now that could take piles of pain away for clients with their massive integration management capacity. This year and in the years to come, it is time for a shakeup in the services space and environment. Moreover, the time for the reckoning of technological offerings and service vendors is upon the world now.