2022 (and Beyond) IT Outsourcing Trends to Keep You on Top of the Industry's Game
“Master your strengths, outsource your weaknesses.” So says Ryan Kahn, founder of the Hired Group. And he’s not wrong. All kinds of businesses, from the largest biotech firms to the smallest garage start-ups can benefit from bringing in outside expertise.
Nowhere is this more true than in the world of tech solutions. In this article, we’ll look at IT outsourcing: what it is and why it’s beneficial. We’ll also examine a few of the most important trends in the industry we’re seeing in 2022.
Let’s start with a basic definition.
What is IT outsourcing?
The modern globalized market provides multiple opportunities for using third-party service providers to meet your business needs. The IT field lends itself particularly well to this since the best modern tech solutions have a worldwide reach. And as we all know, taking an international view is absolutely fundamental to modern business strategy.
A company in the US, for example, might benefit from using VoIP apps purposes to help attract and retain customers from Canada or even further afield. While a software development company in Germany could see a considerable boost to the bottom line by hiring specialized testing teams in Eastern Europe.
Some of the most popular examples of IT outsourcing include:
- Web hosting.
- Helpdesk management.
- Database administration.
- Application development.
- Application support.
- Network monitoring.
- Data center operations.
- Backup and disaster recovery.
Benefits of IT outsourcing
There’s a reason that the global IT outsourcing market is estimated to be worth around $395 billion in 2022. It offers a range of tangible advantages for modern businesses both large and small. Here are just a few.
This is probably the first benefit most people think of when considering outsourcing. Hiring a provider to perform specific functions rather than using an in-house team can save a lot of money over time. That’s why a lot of companies like docusign, an e-signature software, can easily send important documents to the agency they partnered up with. In essence, you only pay for the services you need, rather than take on the labor costs of hiring full-time employees.
Ready access to specialist skill sets
Even if you have a general preference for hiring full-time workers, it may be that you have a sudden upsurge in workload that needs to be dealt with now. Unfortunately, all your employees are already working full pelt and there’s simply no more capacity. It’s not always straightforward to recruit talent with the precise skills you require at short notice. It’s a process that can take time, and you may not be able to wait that long.
Say you’re in a position where you have to overhaul your company website fast. The main part of the work has been done, but when it comes to user experience testing, your teams are all fully committed to other client work that takes immediate priority. In this case, outsourcing usability testing would be a fast, easy solution that frees up your in-house talent for more important tasks.
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Simplified project management
The more complex a project, the more complicated it is to manage. Any contractor hired to deliver on a particular part of the project will take responsibility for managing their own tasks. You won’t have to devote any resources to managing that part yourself.
Projects occasionally suffer disruption if key employees move on before others are ready to take their place. This is much less likely to happen with outsourced work, as the contractor takes on the responsibility of delivering uninterrupted service.
Current trends in IT outsourcing
There’s no doubt that outsourcing specific IT tasks can allow your in-house teams to focus on their core goals like honing your marketing spend optimization strategy or hitting those quarterly sales targets. Looking at the bigger picture, though, it’s interesting to note how the way this aspect of the business is developing reflects the evolution of tech itself. Here are a few trends in IT outsourcing that are particularly relevant in 2022.
Further shift to the cloud
Why is this an ‘IT outsourcing’ rather than just an ‘IT’ trend?
Cloud computing is the term given to any use of remote servers to store, manage, and process data. A typical example would be the off-site management of business databases using gold standard database software like pyspark data types. Essentially, its attraction lies in its convenience.
Cloud computing can be regarded not just as an industry in itself, but more generally the modern paradigm for tech in business. It encompasses a variety of different delivery models including infrastructure as a service (IaaS), platform as a service (PaaS), and software as a service (SaaS). Consider using microservices for legacy software modernization to expand your cloud strategy.
The rise of cloud computing over the past decade has seen the value of the market soar. The advent of the covid pandemic simply accelerated a process that was already happening, as more and more businesses sought out IT solutions appropriate for a remote workforce. According to Grand View Research, the market was worth $135 billion in the US alone in 2021, and this is expected to more than treble by 2030.
The main challenge with cloud-based services, as with so much else in tech, is security. The cybersecurity company Check Point surveyed a number of top professionals in the field. As many as 68% of respondents said that the biggest cloud security challenge was misconfiguration or incorrect set-up of the cloud. They also identified unauthorized access and insecure interfaces as the second and third most significant issues respectively.
Of course, these are experts who know what they’re doing. This leads us to the second trend you need to know about.
Increased demand for cybersecurity specialists
As more work is done remotely, so the risk of cyberattacks increases. The sudden leap in remote working that was forced on many companies in 2020 was born of necessity. This meant that not every business was fully ready for the security challenges that accompanied it.
According to the HLB Cybersecurity Report 2021, only 17% of businesses reported they had made no changes to their cybersecurity protocols since the beginning of the pandemic. It also observed that senior management now oversees these protocols in 66% of businesses, a considerable increase.
For some time, many leadership teams had perceived cybersecurity as just one task among many, and one which could be delegated to specialists at a more junior level. This is no longer the case.
The spike in cybercrime targeting businesses has clearly spooked many senior managers. Verizon reported that the average cost of a data breach soared to $21,659 during the pandemic, with around 5% of attacks costing in excess of $1 million. That’s simply not acceptable. Senior leaders are now prioritizing preventing disruptive attacks like these, which is going to mean a very high ongoing demand for security experts.
Even more remote working
We’ve touched on this a couple of times already; it’s quite clear that remote working is here to stay. Some managers may still be resistant to this trend, but with the best call center software for small business, workers can be just as productive at home as in the CS office.
Gartner predicted in June 2021 that 51% of global knowledge-based workers would be working remotely by the end of the year. It also pointed out that there’s a cultural gap: more workers in the US now work remotely than in any other country (53%). The UK is close behind on 52%, with Germany (37%) and France (33%) a little further behind. India (30%) and China (28%) also have a vast number of remote workers. There’s still plenty of scope for growth, though.
In the same report, Gartner observed that many companies have been forced to bring forward their digital business transformation plans by around five years, especially now that businesses have been introduced to the best conference call services. This is a big deal.
Growing focus on machine learning and AI solutions
The proliferation of machine learning software and AI-based solutions has been a noticeable development over the past five years.
One of the most visible implementations of AI online has to be the little chatbot that pops up to ask you politely why you’re visiting the website today and whether you need any help? In pursuit of low-cost, dependable customer service, many companies are going down this route. The key to uptake here has been improvements in the underlying technology. The first generation of chatbots was not always seen as reliable, but that’s changing.
Of course, chatbots aren’t the sole application for AI. One of the most promising avenues of research concerns using AI machine learning techniques to improve cybersecurity protocols. They can be used for malware analysis or to prevent cyberattacks via anomaly detection. This makes them useful for distinguishing between legitimate mass email and unwanted spam phishing attacks, for example.
We’ve been hearing for years that AI is still very much in its infancy. Although this remains true, there has been noteworthy progress. To stretch the analogy a little, we shouldn’t make the mistake of thinking of the infant as a mewling baby. These days, it’s more like a precocious three-year-old. In other words, AI and machine learning are already proving their worth, but there’s much more to come.
Rise of the Eastern European powerhouse
Eastern Europe is already a popular destination for outsourcing work, and its influence is growing. The region is brimming with top-quality talent, but labor costs are lower relative to countries such as the US or UK.
This comparison of DevOps engineer pay makes the point. The average base monthly salary in the US for this position comes in at around $10,000. By contrast, you can expect to pay around €4,200 ($4,500) in Poland.
It’s not all about the money, though. Eastern Europe has a highly educated population and well-developed infrastructure. Its geographical location is convenient for multiple time zones, and it has a vibrant start-up ecosystem. It’s the perfect package and an attractive place to do business.
The nearshoring trend
In fact, Eastern Europe is a good example of the nearshoring trend. Offshoring has been a standard business practice for several decades, but it comes with certain downsides. Although it helps businesses cut costs significantly, the fact the contractor is usually based on a different continent can pose problems.
These include time zone incompatibility, whereby there’s not much overlap in the working hours of the two organizations. This sometimes delays projects because communication can be slow and piecemeal. Also, there can be tricky cultural incompatibilities between the two teams.
Nearshoring attempts to find the best balance between offshoring and in-house working. It involves outsourcing work to teams in a nearby country. For example, a bank based in the US could engage a software development team in Mexico. Or a start-up in Germany that wants something more tailored than free images for its marketing could contract a design company in Romania.
In these cases, the time difference of the working day will tend not to be any more than two or three hours. Businesses can benefit from specialist expertise that is continuously available at a reasonable price.
The Internet of Things and 5G
The Internet of Things is forecast to be one of the biggest trends of the coming decade. The term refers to everyday devices or items such as home appliances, cars, or clothing being connected to the internet. This would also include data connections such as the 5G network.
Although the telecommunications industry is the obvious winner in the 5G revolution, it is by no means the only beneficiary. Using modern 5G connectivity, businesses can develop solutions bringing together manufacturing, distribution, and other systems to improve efficiency. This includes things like smart packaging to track stock more easily through the delivery chain, for example.
Good logistics are crucial to any modern company. Even if you invest heavily in sales coach software and training to help your staff close those vital deals, it won’t matter if you can’t deliver effectively.
Luckily, there are many companies specializing in exactly this kind of technology. And the rapid growth in the number of devices and appliances becoming connected will create multiple opportunities for specialists to offer new services to help companies take full advantage.
The road ahead for IT outsourcing
It’s an exciting time to be in this field. As the possibilities offered by modern tech solutions become ever more sophisticated, we’re going to see huge changes to how work is done.
While some of the trends we’ve mentioned here are already in full swing, others are still at a fairly early stage. Either way, we can expect all of them to become more prevalent over the next few years. So now’s the time to consider what they’re going to mean for your business and pitch these trends in your web teleconferencing meetings. There’s a world of opportunity out there—all you need to do is reach out and take it.
About the author:
Jessica Day is the Senior Director for Marketing Strategy at Dialpad, a modern business communications platform that takes every kind of conversation to the next level—turning conversations into opportunities with Dialpad’s call parking features. Jessica is an expert in collaborating with multifunctional teams to execute and optimize marketing efforts, for both company and client campaigns. She has written for eHotelier and recruit crm. Here is her LinkedIn.