Future IT Outsourcing Trends to Watch in 2018

Outsourcing is a common practice in the information technology and other business sectors, where a company hires an individual or another company to do certain tasks or provide certain services or produce goods for them, reducing the cost of the former in the process. The revolutionary phenomenon started in the early ‘90s, sending unskilled work from developed countries to developing countries. At the beginning phase of outsourcing it was restricted to low-risk areas of the business like payroll processing or data entry. But with time it gradually expanded to more vital operations like research services, healthcare BPO and Outsource Java Development. After more than a decade long success in increasing profitability and cost reduction, the future of IT outsourcing is being questioned, induced by increasing offshore outsourcing costs and governmental pressures.



Why outsource?

Given a company has a suitable outsourcing vendor with regards to education, experience, location, process and communication, the most common benefits of outsourcing include-
  • It enables the internal team of the company to focus on core competencies and establish the company in a different light from its competitors
  • The internal team is also free to innovate and generate new ideas with the additional tasks being handed away to the outsourcing agency
  • Overall cost reduction
  • When you outsource a new product to a facility that has everything in place to produce the product, you don't need to build any infrastructure -rather you can cut the cycle of development and introduce the product in the market within a shorter period of time.
  • Since the tasks are outsourced to vendors specializing in the respective field, they often possess better equipment and technology to meet the needs of the outsourcing organization, better than the latter. So the tasks can be completed faster, and with better quality.
  • Outsourcing allows operations that have a seasonal need to bring in additional resources when needed and release them when no longer necessary.
The Present Scenario
While there are many vocal advocates of the benefits of outsourcing throughout the industrial vertical, the opposing voices pose legit concerns of lacking quality control and hold over the project management among many other issues. But, despite these perceived negative sides, the outsourcing trend has only grown in the past decade and a half. One can easily guess the extent of its expansion through the mushroom growth of call centers, and that is only a part of it. In the current business scenario, it is all about outsource and survive-and stay ahead in the competition.  Apart from its obvious advantages to the outsourcing company, its prevalence today has benefited the agents of outsourcing as well. It has provided individuals with many opportunities to start their own business. It has contributed significantly to the growth of the freelance economy. Outsourcing has ushered in several business opportunities to countries like China, India, the Philippines and Mexico among many others. India has possibly churned out the most out of the boom in outsourcing trends, and the majority of IT companies prefer India in case of outsourcing due to the availability of cheaper labour, resources and better reliability.

The Future Trends in Outsourcing

NOA (National Outsourcing Association) released a report last year predicting the changes that are bound to happen in the coming four years in the outsourcing field. The association surveyed 134 organizations for expert opinion on the future trends of outsourcing, choosing people from the C-level respondents: directors, presidents, senior vice presidents, managers, and specialists. The expected trends are:
  • As per the predictions from analysts, industries will resume their efforts to lower pressures due to short term costs and service providers will be convinced for reasonable pricing contracts.
  • Skill specific outsourcing will be more in focus as the demand for super specialization comes into the global business scenario
  • Reverse outsourcing, where the form may be offshore with domestic employees  are to become the norm
  • Small businesses, startups and SOHOs will rely on outsourcing more in order to reduce the operational inefficiencies
  • The trend of increase in the prices of raw material, transportation and oil will keep companies depending on outsourcing to keep their costs low
  • Europe and Latin America, according to Industry experts and Europe are put forward as the new destinations of outsourcing in the future
  • As businesses shift towards cloud outsourcing,it will consequently cause a rise in support and development 
  • Pharmaceutical giants are all set to launch new medicines at much lower prices than the current ones. This will be possible through partnership with Russia, China and India, which are cheaper places for clinical testing and molecular research.

Industry experts, studying the comparative advantages and disadvantages of outsourcing are of the strong opinion that the future of outsourcing will continue to remain secure due to the range of benefits that it brings to both the buyers and the offshore provider. On the whole, the outsourcing field is expected to expand further due to globalization that links the different economies across the world and has very little room for individualism. Companies will not be able to keep up with the emerging challenges of time relying solely on their internal resources. With the ever increasing technological sophistication across the globe, the future of outsourcing in areas like IT services, java outsourcing India, computer development, research and development and engineering seem to look well secured and flourishing.