Amid a tech talent gap, many companies have turned to outsourcing IT talent to complete tasks such as big data preparation and cybersecurity to save money on internal salaries and free up current employees to complete other work.
In 2017, the global outsourcing market amounted to $88.9 billion, according to Statista, and is set to hold steady in 2018, particularly for business services, energy, and healthcare.
Here are six predictions from Srini Vemula, global product management leader at IT outsourcing company SenecaGlobal.
SEE: IT jobs 2018: Hiring priorities, growth areas, and strategies to fill open roles (Tech Pro Research)
1. Traditional captive centers will decrease
Businesses can expect captive centers to decline in number, as the difference in labor costs begins to vanish, and global companies cannot provide career growth and salary increases to these workers, Vemula said, leading to high turnover and low productivity.
Instead, companies should turn to an outsourcing partnership, which could take the form of a joint venture with an existing IT offshore company, or a partnership with more control on delivery options, Vemula said. In this case, the offshore partner would be able to manage career growth and salary expectations, while the business itself has more control on delivery and security.
2. Partnerships will become more critical
Organizations seeking technical support from abroad due to a lack of skills or budget need to find a partner who can both understand their current needs and anticipate what they may need in the future to meet business objectives, Vemula said. This requires the partner to not only have employees with technical skills, but also to act transparently and work with the company to meet business goals—something not considered in the past.
3. The growth of emerging tech will increase
As more companies look to adopt technologies such as blockchain and the Internet of Things (IoT) and the need for skilled developers grows, they may turn to outsourcing providers, who will need to find a scalable solution for building development teams with in-demand skillsets. These providers will need to invest in employees with skillsets around cloud deployment and big data as well, Vemula said.
4. Companies will focus more on value and less on cost
While most businesses outsource IT talent due to costs, they are increasingly focusing on the value of services provided by these firms, Vemula said. "Today's customers are highly educated and fully aware of any failures associated with outsourcing," he said. "This, combined with the need to deliver IT solutions in time, will increase the need to provide better value to the clients, with transparency."
Businesses will have to pay more for high-quality service providers, Vemula added, but will see the value in doing so.
5. The IT skill shortage will intensify
As more businesses become driven by technology, demand for skilled IT workers will continue to grow in 2018, Vemula said—driving more companies to turn to outsourcing IT roles.
"This will result in heavy demand for key skills like mobile, open source and Microsoft software development skills from outsourcers," Vemula said. "Programmers with specialized skills in newer technologies will be even more difficult to find and infrastructure / network resources will be in high demand as well."
6. The demand for soft skills will rise
Though hard IT skills will continue to be in demand, soft skills will also become more important this year, Vemula said. These include communication, teamwork, and leadership, which all contribute to the success of IT projects.
"In the lean environments of future engagements there will be no place to hide," Vemula said. "Developers must be prepared to fully acquire all the skills, both hard and soft, needed to compete in tomorrow's marketplace. This is what clients will demand."
- Special report: How to choose and manage great tech partners (free PDF) (TechRepublic)
- The US emerges as next unlikely destination for tech outsourcing (ZDNet)
- Why it may be time to stop outsourcing IT (TechRepublic)
- The cloud impact on outsourcing to India (ZDNet)
- By 2022, 1 in 5 workers will rely on AI to do their job (TechRepublic)
Alison DeNisco Rayome has nothing to disclose. She does not hold investments in the technology companies she covers.
Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.