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Watch out for the top 5 trends in outsourcing in 2018
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Watch out for the top 5 trends in outsourcing in 2018

Posted By Praveen Joshi on 11 May 2018

The business of outsourcing is becoming stronger and bigger each day now. And there is enough evidence of that. According to Deloitte’s Global Outsourcing Survey, more than 31% of IT services were outsourced last year and the number is expected to grow this year. Infact, the global outsourcing market stood at USD 88.9 billion in 2017. Surprising? Not really.

Outsourcing IT functions like IT infrastructure, software development, data storage and customer support, gives companies the edge they need over their competitors in terms of knowledge, IT expertise and technology innovation. When other essential business functions are taken care of, these companies have enough and more time at hand to constantly improve offerings and tackle competitive threat.

Also don’t forget that outsourcing works in a big way since it helps companies cut costs too.

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In 2018, as outsourcing continues to grow leaps and bounds, there will be certain industries that take more advantage of it. Here is a look at the trends that will dominate IT outsourcing this year:

1) RISE IN MACHINE LEARNING: The ability of computers to learn on their own is something that a lot of industries like healthcare, tech and finance are betting big on. According to a report by Mckinsey, the total investments in Artificial Learning, (of which Machine Learning is part), was around $8-$12 billion. Of that, the majority went into machine learning. Although last year, machine learning was more about optimising costs and processes, this year its more about creating innovative solutions so that companies can offer more value to their customer. As more MI projects are getting integrated with Internet of things and Big Data, things are getting more exciting in this front. However, since the cost of such technology projects are high, most firms will want to outsource these projects.

2) EXPONENTIAL GROWTH IN CLOUD COMPUTING: According to a Cisco report titled “Global Clouding Index”, cloud traffic is expected to grow 3.7 times by 2020. With even small and medium enterprises shifting to cloud computing for scalability and cost reduction, the demand for cloud computing is all set to soar in 2018. As enterprises increasingly depend on cloud applications to compete for customers, cloud computing is expected to achieve a 50% adoption rate in 2018.

3) INCREASE IN BIG DATA SOFTWARE MARKET: The big data market has shown phenomenal growth over the years and will be a big contributor in 2018 too. Big data software allows faster and an efficient analysis of a more diverse and complicated data on a single platform. Any company looking to expand its business reach and profitability will have to turn to this automated system of data storage, sharing and analysis in the near future.

4) NEW OUTSOURCING DESTINATIONS WILL EMERGE: As per A. T. Kearney “Global Services Location Index”; since 2004 India has remained the number one destination of choice for IT outsourcing, followed closely by China and Malaysia. However, what is interesting to note is the climb of other countries like Philippines, Czech Republic, Germany and Peru. With changing geo-political landscape, 2018 will be an interesting year to watch how these countries compete with each other as an IT outsourcing hotspot.

5) RISE IN EMERGING TECHNOLOGIES: Going ahead, the demand for emerging technologies such as the Internet of Things (IoT) and Blockchain will increase. Currently the number of companies developing apps and software using Blockchain technology is small, but numbers across the global market that are preparing for an increase in demand is significant. In 2018, we expect a surge in demand from Western countries to outsource their need for cost effective Blockchain solutions.

Conclusion

In this age of cut-throat competition and knowledge-based wars between companies, it is realistically not possible for every organization to manage their Information Technology (IT) needs internally, on their own. Firstly, it is very expensive, and secondly, there might be a gap in skill sets required for such technology intensive projects.

In such a scenario, outsourcing demands are definitely going to see a rise. However, its also important to have a solid plan and understanding as to how you will derive maximum value and ROI from this sector. Hence staying abreast of the top trends that are ruling this sector and carefully evaluating the risks and benefits will pay off in the long run.

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