The views of 4,498 technology executives, obtained through the largest IT leadership survey ever undertaken, show us that IT outsourcing remains high on everyone’s agenda. From our perspective as a (global) sourcing practice, this is a recognizable outcome. As in previous years, around half of our respondents are planning to increase their outsourcing commitment. Four in ten are looking to do more offshoring – a trend that has been largely unchanged in recent years. IT leaders tell us that they want to free up their own resources, gain access to new skills and reduce costs. Hot outsourcing areas are application development, followed by infrastructure services and application maintenance.
Upcoming delivery options such as Digital Labour and maturing Cloud services are altering the landscape of outsourcing. Agile methodologies result in very relevant discussions with our clients on what the strategic value of outsourcing is considering the more intimate and integrated relationship between business and IT. The results of the survey show nevertheless that outsourcing remains top of mind.
Hence, the current uncertain times result in shifting IT leadership priorities. Notable changes in priorities compared to last year include: delivering consistent and stable IT performance is up 21%; developing innovative new products and services is also up 21%; cost reduction is up 8%. IT leaders still rank the technology skills shortage (recognized by more than 60% of all respondents) as a key challenge. Considering these priorities and this challenge, it is not surprising that IT executives are looking to external vendors to leverage their needs. Indeed, IT leaders indicate that outsourcing allows them to free up resources to focus on core IT activities (indicated by 49% of respondents), and to access skills not available in-house (indicated by 46% of respondents). In recent years, we have increasingly seen improvement in flexibility and quality as key drivers for outsourcing.
These outcomes show the relevant and conventional role that outsourcing has for IT leaders in achieving and supporting the goals of the business. However, the outcomes regarding growth in Digital also validate an ongoing shift in our profession, from “outsourcing” to “sourcing”. The trend in Digital toward fully digital interactions with customers, employees, partners, vendors, regulators, etc., necessitates capabilities such as Robotics, Data & Analytics, Data Management, Agile, Security, and Service Integration. With an increase of 52% in organizations having an enterprise-wide digital strategy and 34% of IT leaders investing in Digital Labour, we see more unconventional delivery models arising which are leading IT towards being a real business part(ner) further into the future.
In all cases: the value of (out)sourcing in achieving business objectives cannot be leveraged without a clear vision, directive and well-structured preparations. As personal advice: in every (out)sourcing implementation, mitigate the pitfalls of fragmented operational models, inadequate governance structures, and lacking Service Integration. This is made especially relevant by the pressure and/or desire to simultaneously implement and/or manage multiple of these delivery models (i.e. Bi-model, Cloud, RPA, Outsourcing). As always, clear success factors remain: agree shared (business) goals; manage expectations throughout the whole chain; ensure roles, End 2 End responsibilities and dependencies between the parties are clear, and; minimize manual handovers.
I kindly invite you to read and analyze this IT leadership survey – the largest ever undertaken. Please feel free to contact me to discuss the outcomes. I am very interested to hear whether it has given you new ideas for (out)sourcing in these exciting ‘digital’ times.