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10 outsourcing trends to watch in 2015

Stephanie Overby | Jan. 7, 2015
This year brought the IT outsourcing industry an increase in hybrid offshoring, a greater focus on in-house service integration, a new lower-cost consulting model, smaller deals, and bigger governance requirements.

5. Supplier Risk Takes Center Stage

This may be the year companies get serious about managing their IT supplier risk. "As end customers become more aware of a company's supply chain, the brand risk that comes with a supplier failure go up dramatically," says Christine Ferrusi Ross, senior vice president with offshoring consultancy Neo Group. "In 2015, companies will begin to really integrate supplier risk into their daily operations, moving from quarterly meeting risk discussions to making key business decisions based on different risk events on a real-time basis.

"Political and economic turmoil in countries such as Ukraine and Russia will cause outsourcing customer to care in a more tangible way about the locations of their services providers, says Atul Vashistha, Neo Groups's CEO. "However, even though these formally would be considered geopolitical risks, because they primarily affect service providers, the location monitoring will fall to sourcing and shared services teams," Vashistha says. "This is the right approach as we see increased disruptions due to location issues such as shrinking labor pools, changes in laws, weather issues and economic malaise."

6. MultiSourcing Multiplies

There's little doubt that smaller deals among multiple providers is the established model for IT sourcing. But in 2015, outsourcers per customers will multiply even further. "

"The number of service providers each company uses will grow dramatically, driven by growing popularity of cloud in general and Software-as-a-Service [SaaS] in particular," says Scott Feuless, principal consultant with outsourcing consultancy Information Services Group.

That means governance requirements will also magnify. "Managing service providers, due to increasing application focus and the commoditization of infrastructure, will take on characteristics that we see in software portfolio management today — elimination of duplicated and unused services, allowing for growth, negotiating and negotiating again," says Scott Fueless, principal consultant with ISG. "Integration will be absolutely critical and is likely to be the key differentiator between one organization's IT effectiveness and another's."

7. The Business Takes Over

More technology services will be purchased by business leaders rather than IT in 2015. "As consumer products like cars and washing machines and thermostats continue to embed technology, more and more product engineering teams will treat IT and IT services as core purchases and will take over those contracts directly," says Ferussi Ross of Neo Group. "This will split current shared services organizations that don't understand the trend." In the short term, it will also shift power to suppliers who have new buyers to target — minus the burdensome bidding and RFP processes of the past.

"IT will struggle to migrate itself successfully to a service brokerage model, pulling disparate services back in from business units that have put their own applications in the cloud rather than wait for IT to provision infrastructure," adds Fueless. "IT's case will be compelling where they can deliver savings through rationalization, integration and superior service measurement and selection."


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