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Best IT outsourcing practice in 2020

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Outsourcing is basically the process of hiring a third party individual or an organization either locally or internationally for handling certain business activities on your behalf.

IT outsourcing indicates hiring resources outside an organization for handling information technology functions. Some IT companies often outsource data storage to a third party as it proves to be cheaper rather than buying and maintaining their own data storage devices and facilities. Initially, outsourcing was only used for certain basic processes like data entry, but as connectivity expanded and the technological skills kept changing it is now gradually applied for different processes and services.

In this year of pandemic, the outsourcing industry will undergo a major transformation and focus more on building value networks with the outsourcing companies. Co-sourcing will turn out to be the new norm where businesses can support each other and share the risk. The top IT outsourcing companies in India are going to reap the maximum benefit through this co-sourcing. This year the outcome-based outsourcing which is a new practice has gained popularity where the companies hire service integrators instead of service providers.

Some of the best IT practices of 2020

  • More emphasis is given to building relationship networks – Just like the IT companies, even the outsourcing companies are aiming to shift from the traditional value chain to a flexible and scalable value network by the end of the year 2020.
  • Rather, building a value network has turned out to be a top priority for most businesses in 2020. In outsourcing, the value network means setting up a network of relationships or contracts with outsourcing companies.
  • Growing preference toward co-sourcing – Co-sourcing is the latest approach where companies employ an external team to act as their internal team and the two parties work hand-in-hand to create value.
  • The present trend says, that in outsourcing the focus is shifting from cost- cutting to justifying the associated risks. Based on the outsourcing commitments the latest approach is evolving that aims at adding value to both the outsourcing service provider and the IT client. This approach is termed “co-sourcing.”
  • SMBs and startups to generate more business opportunities – If you take a look at the present trend, you will notice that digital transformation has mostly been adopted by large scale enterprises. But when we consider the number of small businesses and startups, it has been seen that the outsourcing companies are also receiving a major share of their business from these small and mid-sized businesses (SMBs) companies.

In order to cut the running cost, focus more on the core business, deal with capacity issues, etc. SMBs have moved more toward outsourcing a major part of their processes.

  • Backsourcing – This is a process where companies bring the tasks they had outsourced back to their in-house development teams. Many companies, mostly the startups believed that it proves to be profitable to outsource product development to third parties only in the initial stages, after a certain period of time when things start moving they would prefer to get back the work to their in-house development team.

 

  • This practice gained popularity in the initial days of 2020 when the pandemic took over. However, only companies that have a team with strong architectural knowledge were successful in adopting this backsourcing strategy. Practically, it is not a very effective approach and is soon going to lose its significance
  • New approaches in this post-pandemic phase – In this phase businesses are facing difficulty in managing their offshore teams with the majority of the employees working from home (WFH). This has given rise to new issues like the security of projects and setting up the VPNs. To manage such issues companies are forced to make changes on their outsourcing contracts for including new clauses like set-up new pointers for WFH, etc. Most of the leading IT companies are trying to resolve such issues smoothly and come up with more flexibility to overcome this post-pandemic normal world.

 

  • Some of the approaches that the businesses are planning to strongly face this post-pandemic situation in terms of their outsourcing practices are installing real-time dashboards for monitoring the work of the outsourced company, reallocating resources to the high priority projects, including new clauses in the outsourcing contract like disaster mitigation strategies that would ensure smooth work, etc.
  • Design outcome-based contracts – Companies are now planning to come up with outcome-based contracts to gain prominence. This is a new move you will notice in 2020. The output-based contracts including traditional projects, time-based contracting or technology prices will be replaced by more outcome-based outsourcing.
  • Companies will now approach the outsourcing service providers not just to complete the project but also take responsibility in sharing the risks as well as the rewards thus focusing on a more value-driven delivery.
    For some effective IT outsourcing practice advice, you can check our website www.sygitech.com which is one of the top IT outsourcing companies in India. At Sygitech we offer you IT consultancy services that can help you in different areas like designing, strategizing, developing and implementing. We use the latest technologies that are in trend to offer innovative solutions for your business that can lay a powerful impact on the growth of your business.

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