it outsourcing trends - 2016 and beyond

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  • IT Outsourcing Trends

    2015 & beyond

  • 1. Worldwide IT Outsourcing market

    2. Digitalization puts pressure on all organizations

    3. Business leads technology

    4. Large contract renegotiation

    5. New working & pricing models

    6. Flexible sourcing models

    7. Project management trends

    8. Co-opetition between IT service providers

    9. Focus on risk

    10. Employment strategies

    11. New technology trends

    Agenda

  • WORLDWIDE IT OUTSOURCING

    $100 BILLIONworth of outsourcing contracts will be

    renegotiated in the following year, according to Stanton Jones.

    Number of outsourcer per company will

    multiply even further

    Organizations want in on the cloudMore than half of all UK organizations are using, or planning to use, public cloud

    vendors. The satisfaction with these cloud vendors, such as Amazon, Google, Microsoft, Oracle, Rackspace, Salesforce.com and SAP is generally high

    Focus on core business is the main driver for outsourcingWhen asked for the main drivers of employing ITO services, 68% of the respondents cited a

    need for their companies to focus on core businesses. Organizations looking to outsource more this year are also returning to investing to support the business, after sweating existing

    assets during the economic downturn in the late 2000s.

    Cloud, utility computing, and virtualization will

    converge, and everything will start to

    look the same

    Businesses will continue to outsourceThe market of outsourcing companies is expected to grow. In UK for example 69% of respondents in a

    survey say they will continue to outsource at the same rate or even more.

  • MORE EXPECTATIONS

    Digitalization is transforming organizations, putting pressure on organizations to adapt. As a consequence they will replace reactive service providers that lack innovation and business understanding with strategic technology partners that are able to deliver deep

    technology driven innovation

  • BUSINESS LEADS TECHNOLOGY

    Technology will be purchased more and more by business leaders rather than IT departments.

    Organizations will migrate to a service brokerage model, focusing on rationalization, integration and security

  • LARGE CONTRACTS RENEGOTIATION

    Many customers will replace traditional outsourcing with multisourcing, cloud-based

    models

  • PROCUREMENT PROCESS

    The traditional RFP fades in front of emerging procurement methods as it takes too long to define specifications & it

    costs too much. Business requirements change and it takes a collaborative approach to identify needs and proactively

    define specifications

  • NEW WORKING MODELS

    Labor as a Service

  • NEW PRICING MODELS

    Business outcome based pricing, pricing based on performance

  • HYBRID OUTSOURCING

    Offshoring is no longer the default. A hybrid model that leverages onsite, onshore, nearshore and offshore

    tends to be acknowledged as the best sourcing strategy

  • OUTSOURCING PARTNERS

    Managing service providers, due to increasing application focus and the commoditization of infrastructure, will take on characteristics that we see in software portfolio management today -- elimination of duplicated and unused services, allowing for growth, negotiating and negotiating again () Integration will be absolutely critical and is likely to be the key differentiator between one organization's IT effectiveness and another's.

    Scott Fueless, principal consultant with ISG

    Large deals will disaggregate in smaller ones for more transparency & control and small projects might be aggregated into complex, enterprise wide solutions for better project governance & to achieve business goals. Outsourcers per customers will multiply

    even further, making project governance a complex task

  • OUTSOURCING CO-OPETITION

    Multi-sourcing strategies will oblige competing service providers to work together to achieve common business

    goals. Various organizations already implemented outsourcing cooperation agreements that bind service

    providers to cooperate at operational level

  • DATA-DRIVEN OUTSOURCING

    Enterprises will choose IT services partners based on cost, project transparency & data to understand

    optimization opportunities

  • DOMESTIC SOURCING & INSOURCING

    Domestic sourcing & insourcing will remain in the game, sometimes brought back, especially for projects that require senior, experienced teams, agility, cultural

    alignment & local business understanding

  • PROJECT GOVERNANCE

    The growing complexity & diversity of service providers ecosystem transformed project governance into a critical

    capability, enabling organizations to manage performance, risk and compliance

  • PROJECT MANAGEMENT

    The day of project management amateurs is over, organizations are struggling to attract entrepreneurial Project Managers.

    Projects get more complex therefore PMs need to become masters in coordinating various tasks, teams and sources.

    crowdsourcing (eg: Wazoku Idea Spotlight) big data (for cost projections or hidden correlations) methodologies adapted to project scope (high focus on agile) dedicated collaboration tools/central project hubs (eg: Slack, Yammer,

    Salesforce Chatter, Flowdock) gain grounds in front of the traditional emails

    gamification (rewards & points to make boring tasks more enjoyable

  • INTERNAL SERVICE INTEGRATION COMPETENCIES

    The increasing complexity of the multi-sourced environments makes internal service integration

    competencies strategic. This enables organizations to keep control, make sure all services are compliant and select easier niche service providers for future needs

  • FOCUS ON RISK

    Integrating supplier risk into business operations Business decisions based on different real-time risk events

  • FOCUS ON RISK

    Geopolitical risks are asserted caution about countries with political and economic turmoil to avoid disruptions

  • EMPLOYMENT STRATEGIES

    IT service providers will increasingly use gamification to keep employees engaged during the performance of

    routine and monotonous tasks

  • EMPLOYMENT STRATEGIES

    BYOD / Work from homeSecurity challenges & strategies

  • EMPLOYMENT STRATEGIES

    Strategic focus on HR strategies, recruitment, talent retention & talent pool creation, SDC &

    certification programs;Recruiters need to enter the marketing game

  • NEW FORMS OF SOCIAL INTERACTION

    Communities (online and offline) will form around products and solutions, being the source of new ideas

    that develop the product, and a way to recruit new employees.

    Forum

  • CLOUD COMPUTING

    As the industry becomes more and more comfortable working with the cloud, the industry is becoming even more comfortable with the benefits of standardization -- increased efficiency, virtualization, reduced support costs. Thus, even in bespoke outsourcing arrangements, there may well be more similarity than difference, both within a single company's formerly complicated IT environment, and across companies --both client and provider. The cloud, utility computing, and virtualization are converging to create this new operating model that will become the new paradigm for IT outsourcing.

    Joshua'Konvisser,'Pillsbury'Winthrop'Shaw'Pittman

    Cloud comes down to earth

  • SMART MACHINES MOVING UP THE VALUE CHAIN

    As artificial intelligence evolves, development and implementation of robot like technologies will be used to automate tasks and processes currently performed manually in house or through outsourcing partners

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