Cloud // Software as a Service
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12/17/2012
12:52 PM
Eric  Lundquist
Eric Lundquist
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7 Ways Outsourcing Has Changed

The old role of outsourcers -- doing repetitive stuff overseas because it is a lot cheaper -- is history. See what's coming to take its place.

7. Outsourcing The Enterprise

Businesses that rely on employees to come to work in a brick-and-mortar headquarters are at a disadvantage compared to companies with a mobile workforce that engages with customers worldwide. The ability to use outsourced services in your customers' locations is an advantage not to be discounted. Mobile computing has created an era of workforce outsourcing, and also one of the CIO's trickiest problems: How to provide services, but still ensure security for the mobile workforce.

I could go on, but the old outsourcing model is in a big transition. The original idea, which I called "doing repetitive stuff overseas because it is a lot cheaper," was probably a model doomed to be deconstructed. Outsourcing customer service was never a good idea. Customers are your source of revenue and new ideas, and you really don't want that knowledge to go away. This original model of outsourcing led to the rise of the big India-based outsourcers, as well as heated arguments regarding job displacement, and was based on more of a business process shift than a technology shift.

As 2013 approaches, I think you will see more outsourcing due to a technology shift, as executives recognize they don't have the internal skills required to accomplish the technology projects their companies require. Mobile, social, cloud computing and big data constitute the big four drivers for business tech in 2013.

-- Mobile development requires a new application design, development and deployment process that few enterprises now have. Consider the rise of the consumer-friendly user interface, the app store deployment model, and the need for responsive content management systems that adapt to various devices. These require expertise not readily found in the enterprise. I'll correct that: The skills may be found in the enterprise, but more likely among the company interns than the company developers.

-- Social network deployment and activity monitoring takes place outside of IT, if it takes place at all. In reality, a lot of social network deployment tends to be ad hoc, and monitoring tends to be after the fact rather than a forward-looking activity.

-- Cloud computing requires a total rethink of the corporate technology infrastructure. The idea that a company would go through three stages of cloud adoption was popular a year ago. You'd take your current infrastructure and create a "private cloud," and then you'd sprinkle in some services to create a "hybrid cloud" and eventually you would graduate to a "public cloud." This was a good plan for vendors looking to bring customers along on a long, slow and expensive process. If your final goal is to be in the public cloud, you can get there a lot faster by skipping the interim steps.

-- Big data and big data analysis are gaining importance, but we lack the requisite skills for it in today's corporate technology departments.

Outsourcers would be wise to deliver the services to fulfill these four drivers, rather than merely doing stuff cheaper. HCL refers to the unfolding corporate drivers as a combination of social, mobile, analytical and cloud (SMAC) development.

"As an outsourcer you conceptualize and you develop expertise ahead of the game," said HCL America's Khorana. "You don't just create expertise, you actually create solutions around that expertise. It is not very easy for an end-user organization to develop those skills."

What may be the most surprising outsourcing trend shouldn't be a surprise in light of the rancor and political posturing that often accompanies a company's decision to outsource services. While I have yet to see anyone protest a company's decision to outsource its infrastructure to Amazon, the decision to outsource to an overseas provider is one where questions around job development and downsizing are sure to be debated. In a development I'd call onshoring, companies like HCL are hiring and developing business operations in the U.S.

Last January, HCL CEO Vineet Nayar outlined plans to hire about 10,000 workers in the U.S. and Europe. You can track HCL's hiring from its U.S. operations website. Outsourcers hiring in the U.S. are developing employees with skills that their customer employee base does not have. This may provide the closing loop of the virtuous skill circle, and could be the biggest outsourcing story of 2013.

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Mahima
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Mahima,
User Rank: Apprentice
12/21/2012 | 6:06:48 PM
re: 7 Ways Outsourcing Has Changed
Outsourcing today has changed drastically. There is a shift in focus from the front end to the back end of the transaction, especially the post contract signing. Leaders from the outsourcing industry are slowly embracing these changes and focusing on governance and relationship management--a critical success factor for any outsourcing relationship!

Not only the operational and strategic models are changing, but there is clear divide in the preferred outsourcing destinations also. Here's a rundown on the emerging nearshore/offhshoring destinations: http://www.minacsblogs.com/Exp...
TechYogJosh
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TechYogJosh,
User Rank: Apprentice
12/19/2012 | 10:10:51 AM
re: 7 Ways Outsourcing Has Changed
Eric, are you just rephrasing and rehashing information that is already available publicly and told millions of time by millions of people? I mean do you think that earlier if a sales wanted a CRM or HR wanted HRM solution, they would go to IT and IT will use its own budget to buy and deploy these solutions? Of course not. Any new application/initiative was always funded by the business unit and that has not changed. So I am not sure how to interpret you comment that IT budget is moving to sales for CRM purpose or to HR for HRM purpose etc. These departments always had their budgets with which they would fund technology initiatives (e.g, deploying CRM or HRM) and ask IT to lead it. Correct me if I am wrong.
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