Why Outsourcing IT will be Big in 2018
Outsourcing IT involves subcontracting the Information Technology function of an organization to a third party service provider. IT functions include software development, maintenance and technical support. Last 2014, research engine Forrester conducted a study which predicted Outsourcing IT services will be in demand beginning 2015 onward. This is largely because of the increasing dependence of consumers and businesses on mobile devices particularly smart phones.
2013 was declared the “Year of Responsive Design” because website developers acknowledged the growing preference of consumers to use mobile devices to search the Internet. This observation was supported by data which showed in 2013, 20% of online traffic came from mobile devices such as smart phones and tablets. Website developers shifted their focus toward responsive design which meant creating websites that would display clearly on a wide variety of devices regardless of scale without compromising resolution and content. Data gathered on business trends also supported the call for responsive design. Surveys have shown that 50% of consumers would not patronize the products and services of a company without a mobile-friendly website.
The dominance of mobile technology was defined by two landmark events during the last quarter of 2014 and the first quarter of 2015. In October 2014, there were 7.2 Billion registered SIM cards operating in the world or 100 million more than the population of the entire planet. In January 2015, mobile devices officially surpassed the desktop as the primary source of online traffic. These figures are expected to grow as industry analysts project the number of smart phone users to double to two billion before the end of 2015.
As the world grows increasingly mobile, companies are scrambling to revise the business agenda to accommodate the changing tastes and preferences of their target markets. Outsourcing IT presents a viable solution for these companies for a number of reasons:
1.Lower Cost
Outsourcing services such as IT reduces cost because the comparative costs of business in other countries are significantly lower. The major cost component is labor which in countries like the Philippines and India is one-third lower that their foreign counterparts. Infrastructure to support IT functions are also lower in other countries.
2. Improved Quality
India has remained the top destination for IT outsourcing for the past several years with the Philippines following closely behind. According to 2014 year-end global outsourcing data, more than 50% of outsourced solutions were for highly skilled and technical services including IT.
3. Greater value proposition
When outsourcing solutions to a third party services provider, you improve the value proposition because the scope of work will not only involve product development but technical support, networking, data base administration and security management. Costs will be spread out over a wider range of services which will also improve efficiency.
4. Managed Risk
Because costs are lower in the outsourced country, your risks are much lower and contained in a specified area. Additional capital presents lesser exposure than if the processes were conducted in-house.
5. Focus on Core Functions
An overlooked benefit of outsourcing services is its ability to allow the client to align its resources on core functions which are directly related to the growth of the business. While a measure of involvement is required from the client, its managers, officers and key personnel would be able to focus on areas which are covered by their competencies.
As businesses continue to look for ways and means to introduce greater efficiencies, technology will continue to evolve. Technology has created a tightly competitive business environment where companies need the capacity to get more work done faster. With the emergence of mobile technology, convenience and mobility have become additional requisites to upgrade current infrastructure.
Outsourcing IT will remain an effective solution because economies of scale magnify the benefits as operations expand.