Why CIOs continue to invest in outsourcing despite the warning signs
CIO – Doug Drinkwater
In their efforts to drive transformation and continue to deliver at the unprecedented levels seen through the COVID-19 pandemic, todayâs CIOs are increasingly reliant on onshore (within the same country), nearshore (to a nearby country or in the same time zone), offshore (to a distant country) and cloud computing providers to bolster teams, focus in-house staff on core operations, improve service delivery and round out the IT function, and oversee tasks as varied as help desk support, software development and disaster recovery.
In Gartnerâs IT spending forecast last year, the analyst firm said global IT spending would reach $1.19 trillion in 2021, with worldwide spend on consultancy and implementation services, and IT-centric managed services, infrastructure and application support, expected to come in at $490 billion and $475 billion, respectively.
Separately, the Global Industry Analytics report proclaimed that the value of the IT outsourcing market would grow by 5% year-on-year between 2020 and 2024. In a survey of 200 companies across industries, the Boston Consulting Group (BCG) found that 79% of organisations had asked service providers for help in some form through COVID-19, such as for longer payment terms (47%), price reductions (45%), or free support for more processes or additional services (41%).
IT outsourcing is a flourishing $92.6 billion market, says Forrester senior analyst Jeffrey Rajamani, who adds that partners can offer CIOs greater stability in an uncertain market while helping them to be more creative and resilient.
According to IEEE Computer Societyâs 2021/2021 IT Outsourcing Statistics report, the most commonly outsourced function within IT today is application development (56%), although IT leaders also outsource helpdesk and desktop support, networking monitoring and management, system implementation and integration tasks, as well as backup and disaster recovery services.
Pourteymour sees four immediate areas worthy of consideration: server/infrastructure management, data centre management, applications management, and helpdesk and workplace services, such as laptops and software patching. Meanwhile, McMahon has recently outsourced records management, storage, digital transcriptions, components of cybersecurity and device management, as well as data warehouse management.
Olsen and Rajamani say the outsourcing market is moving to become more outcome-driven with value-focused pricing, with Rajamani adding the former is an âengagement structure that explicitly targets business-oriented goals, including cost savings, time-to-market, higher revenues, or customer acquisition/retentionâ.
The Forrester analyst also says thereâs greater use of automation, from chatbots to RPA, in order to drive efficiency, costs savings and better customer satisfaction, as well as a switch from SLAs to so-called experience-level agreements, which measure the performance of IT by quantifying the end-user experience and IT service outcomes.
Link: https://www.cio.com/article/408916/why-cios-continue-to-invest-in-outsourcing-despite-the-warning-signs.html