Some Outsourcing predictions in 2020 – with Covid-19 impact

If there is one thing that the COVID-19 pandemic has taught us, it is that the world is unpredictable. The biggest impact of COVID-19 has been in turning our personal lives and working worlds inside out, but we’ve been resilient enough to reshape ourselves. We are witnessing the world’s biggest ‘work-from-home’ initiative. As businesses turn their attention to the fallout of the panic, namely lacklustre demand, and a flailing economy, this article talks about some outsourcing predictions for 2020 and beyond. While in the past, outsourcing was highly price-relevant, the future seems to be geared towards inclusivity and digital processes.

Increasing Value Networks In The IT Organization

A value network is a relationship between an organization and every entity that works with the organization to better the business. The value network could include employees, outsourcing vendors, partners, alliances, and customers. While it was thought that value networks had reached a stage of maturity, the effects of the coronavirus have halted this belief. 

The entire organizational ecosystem will have to be step up to increase this Value Network. As companies look to innovate, increase productivity and competitiveness, the importance of the value network becomes paramount. Companies and their outsourcing partners need to achieve better transparency in taking stock of where they currently are and work towards improving efficiencies. New frameworks, reduction of redundant activities, risk management, and adherence to regulatory requirements will be the new building blocks of outsourcing in 2020. 

Increase In Digital Presence

Digitization will become even more important to businesses looking to outsource. Advanced digital collaboration with digital tools like AI/ML becoming mainstream, will allow businesses to redefine their operations and to enter new aspects of outsourcing such as data analysis and customer-centricity. 

Embracing their digital presence and incorporating methodologies like Agile, continuous delivery, and flexible architectures based on APIs, micro-services, and virtualized cloud solutions will increase innovation and efficiencies and reduce time-to-market. Real-time dashboards will allow organizations to track and monitor all work and processes being outsourced in real-time. 

Digital Execution

While almost all large organizations have an outsourcing strategy, they have been lagging in digital execution. The use of next-gen tools, Dev-Ops processes, and methodologies will speed up application development outsourcing execution. Digital execution is a crucial part of the overall Digital Transformation process. Market demands will now be expected to fluctuate in the air of uncertainty. Post the coronavirus, organizations will look to provide well-defined outcomes using a friendly design, while delivering them with agility, speed, and quality. This can be possible only by using a continuous delivery platform incorporating customer work-flows, analytics, and real-time tracking of each individual business step. 

From cloud, networking, and mobility first approach to information security, the capabilities of the platform will be essential to recover and restore operations and posture organizations strongly for the coming years.

Startups And SMEs Will Jump On The Outsourcing Bandwagon

Till recently, start-ups and SMEs were considered fringe players for organizations that carry out outsourced work. SMEs and start-ups have seen tremendous growth in the past five years. According to the 2019 Global Start-up Ecosystem Report (GSER) the start-up economy is generating $3 Trillion globally. Even though individually small in size, they are also looking to minimize costs and keep core development activity in-house, while trying to achieve scale and quality. Outsourcing helps them achieve exactly this. What’s more, these smaller companies take outsourcing decisions more rapidly. Their sheer number cannot be ignored anymore. 

Better Understanding Of The Risk Matrix

As the coronavirus has shown, risk can come from anywhere. In 2020, organizations will evolve to address the widespread anxiety around outsourcing and defining future-state risk mitigation mechanisms. By taking a complete inventory of Information Security, third-party risk management, cyber risks, incident management, business continuity, and disaster recovery, organizations will be able to develop better-integrated frameworks to manage and control various forms of risks in the post-pandemic world. 

Outsourcing providers would do well to incorporate security and risk management best-practices in their portfolio.

New Engagement Models

As organizations are looking to move away from large single-vendor contracts to multiple vendors, the rules of engagement will shift. The standard time and money-based contracts may become a thing of the past, with more partnership-oriented contracts coming into play. Custom contracts based on outcomes will become popular, as they will mitigate risk for organizations while providing a part of profit-sharing with the outsourcing vendors. The benefits of this type of contracting include more transparency, reduced cost of ownership, better throughput, and greater speed and agility.

Summary

The market and company policy will determine how outsourcing trends will transpire in the future. While not fully predictable, there will be favourable trends towards outsourcing application development to countries like India. With IT budgets set to increase dramatically, lean infrastructure, cloud computing, and Dev-ops automation will improve the speed of digital transformation. Outsourcing will continue to be relevant for application development in 2020. 

Current outsourcing frameworks will be reworked to provide better transparency, risk management, profit sharing, and integration with a larger vendor ecosystem. Low code application development platforms providing visual representation tools, widgets, and out-of-the-box templates will be harnessed to meet changing business requirements on time and within budgets.