Originally published in Forbes by Robert Krajewski | January 28, 2021
Remember the good old days when people would book the nearest flight on a whim or casually pop into a restaurant without checking its dine-in policies? Today, last-minute plane trips and impromptu restaurant visits are long gone. They seem as surreal as crowded multistory corporate buildings, two-hour commutes or work in the office.
The workplace transformation forced by the pandemic is set to make telework a permanent arrangement for many organizations. As office-based work is turning into a home office, new opportunities for outsourcing emerge.
Tough Times For IT Outsourcing
Ten years ago, Forbes heralded “the end of the age of outsourcing” (and others followed), envisioning downgrades in outsourcing contracts in favor of expanding in-house teams. While this reversal predominantly affected manufacturing, the IT sector suffered collateral damage.
Whether prompted by the growing labor costs in the traditional outsourcing destinations or challenges aligning external staff with the company’s culture and goals, at one point, America’s companies started moving away from third-party suppliers. International IT outsourcing found itself in a tight spot. Then, Covid-19 happened.
Turning The Tide
Things weren’t still looking bright for IT service providers in the early days of the coronavirus pandemic. Following travel restrictions, the abrupt decline in incoming projects, and dips in company revenues, businesses were releasing external contractors as an immediate fix to endure the first wave of the crisis. As a result, the global IT outsourcing sector sustained a heavy blow, reducing value by 5%.
However, once companies recognized the need to deliver a sustainable response to the crisis, the tables have turned again for IT suppliers. IT services’ demand intensified with organizations accelerating digital adoption to bounce back and build resilience to weather future disruptions. The pandemic has actually reinforced the benefits of IT outsourcing, and here’s why.
Covid-19 Has Speeded The Digital Adoption By Several Years
In just a few months, Covid-19 has fast-tracked digital transformation for global companies by an average of six years, according to some experts. The crisis has forced an increased reliance on digital tools to communicate and collaborate online securely. A host of new customer demands spurred by the pandemic urged businesses to embrace new technology areas to offer faster, modern and more convenient experiences.
Consequently, 95% of IT professionals have seen their organizations redefine technology priorities following the Covid-19 outbreak, and 63% of Fortune 500 CEOs (paywall) expect the 2020 crisis to propel tech innovation in business.
As companies reset business strategies to ramp up modern tech solutions, they are more likely to use external support to achieve this faster. Research confirms that; the 2020 Global Managed Services Report by NTT suggests that 45% of global corporations are planning to outsource more work in the next 18 months.
Employers’ Skepticism About Remote Teams Has Eroded
The enormous workplace transformation helped overcome major concerns over remote work delivery, whether by internal or outsourced teams. Numerous studies have since validated that, in most cases, productivity in virtual teams isn’t affected.
Realizing that they can operate with fewer workers on the payroll without compromising productivity, businesses turned back to scalable external teams whose services are specifically designed for remote business support (with innovative tech stacks, security policies and standards compliance).
Contractors Help Counteract The Impact On Revenue
When companies are looking for savings now more than ever, outsourcing teams becomes a viable cost resilience strategy. By hiring offshore software developers and other IT suppliers, organizations can eliminate office space and cut down all the associated costs (think rent, property taxes, cleaning, maintenance, security, utilities and so on).
A contracted, scalable workforce also helps reduce expenses related to recruiting and onboarding staff, managing employee needs, covering for absences, or investing in employee training. As a flexible model, outsourcing provides companies with an opportunity to quickly bring on board experts they wouldn’t be able to source otherwise, at a fraction of the hiring cost.
The Outsourcing Model Has Moved From Cost Reduction To Driving Innovation
Amid the turbulent changes brought by the pandemic, IT has become integral to strengthening business resilience. And the IT outsourcing industry is readily adapting to these new dynamics.
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