How is outsourcing going to change in 2015? Outsourcing industry is a large ship that won’t turn on a dime, yet various forces have been reshaping the industry for quite some time and results are becoming more obvious every day. Certain trends ought to be followed as the landscape changes to accommodate new demands from individual consumers and businesses alike.
The strongest forces that shape the outsourcing industry include technology advancements such as raise of AI, cloud technologies and advanced robotics and automation. Another group of trend setters is related to political changes in the world, increasing standards of living among IT population of common supplies of labor in that sector – India, China and Eastern Europe.
Re-shoring, rural sourcing and near-shoring will grow
Regional providers are taking the stage, as the re-shoring trend is emerging strongly. While global outsourcing still maintains its position, local and nascent players will increase their reputation and take larger chunk of the market utilizing near-shore advantage in addition to cost effectiveness and productivity.
More tools, processes and systems will move to the cloud
More intelligent apps, software and agents will be implemented in the cloud, to make everyone’s job easier. Clients and providers will meet on this common ground in 2015. Labor will be seen more and more as a service, following in the footsteps of this trend. Cloud offering of services akin to Amazon’s Mechanical Turk is going to pick up pace as well.
Standardization is embraced across broader range of technologies
Benefits like reduced costs, increased efficiency and virtualization are expected to be strong arguments in favor of standardization this year. As technology continues to move to the cloud, this is a follow up to be expected.
Automation of various IT activities combined with move to the cloud will contribute to commoditization of IT services and reducing the rates.
Expect strong renegotiation efforts
Contracts will never be the same again, as 2015 is expected to be the year when multi-million dollar contracts are renegotiated. Again, this is a consequence of the cloud revolution, since more and more clients will prefer contracts based on outcomes and to multisource instead of outsourcing to a single provider per project.
Competitiveness will only increase throughout the year, and consolidation on the market will not happen for those who are not willing to give up on a portion of their cut, in order to accommodate the new challenges and requirements from clients.
Focus on business
More and more technology services are expected to be purchased by businesses in 2015. The IT sector will have to rethink itself as a result, as focus on business and customers is soaring.
Multi-sourcing and micro-sourcing on a rise
The need for more effectiveness will lead to increased multi-sourcing and micro-sourcing. Everyone will hire more and more providers and projects are expected to be split in smaller bits for these low scale providers.
Increasing supply of freelancers at all levels of skills
While outsourcing remains extremely competitive, the diversification will continue, and the need for freelancers at all levels of skills will increase as a result.
Information Security / Data Privacy issues proliferate
With more data is uploaded in the cloud, issues related to how well big data is protected and handled will emerge, posing bigger challenges for companies. AI-based security threats will become more prevalent creating new class of cybersecurity threats and at the same time opening new opportunities for outsourcing.
More challenging employee retention / higher turnover
Employee retention has always been an issue with companies, and the relation between this and a company’s turnover is crystal clear. With more possibilities for employees to choose between various projects and higher pays, this will be, without a doubt, one of the biggest challenges for human resources departments.