The Rules of Outsourcing Have Changed

Published August 31, 2018

Category: Innovation | Outsourcing

Become A Contributor

Written by: Graham Fell
Author Image

Graham Fell

Graham Fell serves as Executive Vice President for FlexDev for the U.S and Asia Pacific. He is also responsible for marketing and building out the go to market strategy and partner eco-system. Graham has extensive experience in marketing and strategy and has held senior positions at Intel and Hewlett Packard Enterprise. Before FlexDev, Graham was CEO to PROLIFY – a global sales and marketing services company for the high-tech industry. At FlexDev, Graham is also responsible for building out the Next Generation Delivery Center concept (NGDC) to help future-proof enterprises and regularly participates in discussions and think tank forums to discuss the future of outsourcing. Graham speaks at Universities and technical institutes on the current technology shifts/trends in IT and the challenges that come with it. Graham works in the US, France, and London.
 
Read More
The Pace of Transformation 
 
As the pace of transformation ramps up in the technology industry, the chasm is widening between the number of roles that need to be filled and the number of relevantly qualified resources to fill them. Technology is changing the world and our lives at such a rapid pace that it’s hard for companies to keep up with the shifts caused. Examples of major technology shifts include the Internet of Things (IoT) and apps (cloud-based and mobile). By 2020, it is predicted that 7.6 billion people will have 100 billion connected devices that run 1 trillion apps. 
 
Technology shifts open up, which is good for business, but this creates larger workloads for software development departments. The challenge is that companies lack the technology, skills sets, resources and strategies to manage their workforces effectively. It’s predicted that by 2020 over 80 percent of companies will rely on temporary or contingent workers to fill skills gaps as the battle to recruit talent intensifies. As the pace of transformation increases in the technology industry, companies are struggling to find the people they need, with many claiming that graduates are leaving university without relevant skills and talent. In the same time span, the U.K. is expected to have a shortage of 800,000 tech workers.  
 
The Traditional Offshore Outsource Model is Broken 
 
Due to the current and impending shortfall of IT professionals for the U.K. market and the challenge to find talent, other issues will arise in the form of retention. Supply and demand are already an issue and companies will enter bidding wars to lock down the best IT and digital professionals. Retention will be a problem as IT professionals will accept better paying jobs, so how to secure and keep digital talent must be addressed. The traditional outsourcing model to offshore companies will no longer suffice. With AI developments happening so quickly, it no longer makes service or commercial sense to offshore as it once did. It is no longer true that a supplier who can muster thousands of cheap resources (which are not as cheap as they used to be) represents a compelling proposition.   
 
What is the answer? 
 
When considering outsourcing, which companies will have to do to fulfill demand, they will need to think carefully. Leveraging a nearshore model is becoming very popular. Companies can use nearshore delivery centers with best-in-class experts who are trained and up to speed with the latest technologies and software development tools and methodologies. The nearshore model is proving to be very successful and companies that leverage delivery centers can use several engagement models from managed teams, extended teams and managed projects. This model is proving to be more cost effective, with an increase in quality and speed to market.  
 
Gone are the days when companies can afford to wait for multiple attempts before getting it right. With the velocity of change and the speed at which things need to be done, using an onshore model with a trusted advisor is the key. To lock down and secure resources for the long term, companies should look to partner with outsource providers that have pioneered, built and managed teams that eventually become fully owned assets of their clients (while ensuring that the culture of their client is fully embedded from the outset). This will enable companies to build, recruit and retain their digital talent for an automated, tech-driven future. 

You May Also Like…

Adam Smith and outsourcing

What does Adam Smith tell us about outsourcing? The answer is somewhat complicated: Nothing directly, but then again everything. I’ll explain. Obviously, the term outsourcing did not exist when...

SIG|ORG Spotlight Content