IT Outsourcing Trends in 2023
Outsourcing IT services includes planning, installing, maintaining, and replacing IT equipment within a company’s IT infrastructure. In addition to on-site and help desk support, contracted IT service providers may also provide remote support. As needed, as a support team for the existing IT department, or as the entire IT department can use the combination of these services.
Companies benefit from these services in many ways, including cost control, expertise, speed, focus, and security. There are also some potential drawbacks to them. The advantages and disadvantages of each option must be weighed by each company. Regardless of the decision, every business should at least consider how this valuable service can benefit them.
The following sections discuss the advantages and disadvantages of IT outsourcing, examine the current and expected trends in IT outsourcing, and offer tips for choosing the right IT outsourcing provider.
Why Your Company Should Outsource IT Services
IT teams and entire companies can benefit from the following advantages.
Cost control. Outsourced IT services can be paid monthly in some cases. Costs are more predictable because of this strategy. In addition, companies may be able to reduce labor costs by eliminating or greatly reducing hiring processes. It is typical for outsourced IT providers to hire IT professionals and manage their careers, salaries, vacations, education, and other HR matters on their own.
Expertise. IT outsourcing companies deploy their professionals across a variety of industries and companies. Therefore, they become familiar with common challenges and issues quickly. Each of them shares best practices and keeps up with the latest technological developments. It is likely that your IT problems will be solved promptly and efficiently with this level of expertise.
Speed. You might have to put off urgent projects if you rely only on your own ability to hire and train IT professionals. When you outsource those tasks to an IT team, you can begin immediately. Further, as mentioned above, these teams are highly experienced in a variety of deployments, ensuring that your project gets off to a great start.
Focus. Even if your regular IT team handles most of your IT needs, it can be beneficial to bring in other professionals when you want your team to focus on high-level matters, such as finding solutions to challenging business problems. From the other perspective, your IT team may not have the competencies to implement some projects. Supplementing your staff with outsourced IT is a great idea.
Security. There is a possibility that not all members of your company’s IT team are trained in security standards. An outsourced IT team can provide engineers who are familiar with compliance standards. Every business needs to be up to speed on security, so don’t try to figure it out on your own.
Trends in IT outsourcing
The COVID-19 pandemic has increased the need for IT services and, therefore, IT outsourcing. During the pandemic, companies significantly changed how they work, focusing more on digital solutions for accessing information and applications, and communicating. As part of this transition, the cloud is becoming increasingly important. As a result, both the number and severity of cybercrime have increased substantially.
These points are supported by recent studies. According to Logic Monitor, 87% of global IT decision-makers anticipate accelerating their migration to the cloud in the wake of COVID-19. By 2025, “95% of all workloads will be in the cloud.” Separately, a recent CNET article reported that the number of reported breaches in 2021 reached the highest level ever.
These trends are followed by IT outsourcing services. In addition to supporting operations and enhancing employee productivity, outsourcing firms help companies implement, maintain, and build digital systems.
In addition, these service providers are focusing more on cybersecurity. In the next few years, experts predict that worldwide expenditure on information security will reach hundreds of billions of dollars. The outsourcing companies discussed above have a firm grasp of what is needed to ensure business cybersecurity, such as virtual private networks (VPNs), secure sockets layers (SSLs), and multifactor authentications.
The development of applications is another trend in corporate IT departments and, consequently, in IT outsourcing. Companies can increase efficiency by using proprietary software applications to support unique business processes. The development of these applications, however, can be costly in terms of both time and money. This is why more organizations are bringing in outsourced software developers to create these applications, freeing up their in-house IT teams to focus on regular maintenance and planning.
Market for IT outsourcing in 2022
There is a growing market for IT outsourcing worldwide. By 2027, the global IT outsourcing market is expected to reach $682.3 billion, according to market research firm Mordor Intelligence LLP.
In 2022, some trends that have appeared in recent years are starting to fade. During the pandemic period, pricing flexibility was popular. During that time, IT service providers lowered their prices to ensure their clients received what they needed, partly due to the volume of work that came in. Once normalcy returns, the same providers will not be able to maintain the lower pricing.
There is also a slowdown in massive cloud migrations. Even though many companies are still moving to the cloud, many have already done so, and the next phase of their IT operations will focus more on increasing efficiency in specific cloud-based functions. In the future, cloud migration engagements will become shorter and less involved.
There may also be a decline in comprehensive IT services provided by one provider. It is becoming rare for one company to provide all IT services due to the increasing specialization of IT companies. As a result, companies seeking IT support may find themselves contacting several companies to meet all their needs. It’s good news that these companies are forming partnerships, so IT customers can benefit from trusted referrals.
In 2022, the COVID-19 pandemic put an end to the rush to send employees home to maintain health standards, which began in 2020. The need to provide IT services to remote workers is decreasing as more companies bring team members back into the office.
Teams are looking to outsourcing service providers for more than just meeting key performance indicators (KPIs) and moving away from service level agreements (SLAs). This shift has led to the development of the experience level agreement (XLA). The focus is not just on how the systems work on the back end, but also how team members experience the technology and how effective it is.
Observations for 2023
The role of IT outsourcing in 2023 will change due to changes in how companies conduct business and political and economic forces.
IT outsourcing is becoming more crucial as digital solutions become more integral to business operations and IT professionals become harder to find. The relationship between organizations and their IT providers is becoming increasingly important. Further, outsourcing providers will no longer be just commoditized services in the future, but long-term partners to help companies drive growth, improve customer experience, and create competitive advantages.
IT outsourcing organizations can provide value back to businesses in a variety of ways because businesses are increasingly demanding greater customization of systems and solutions. IT outsourcers are compensated in a way that reflects their participation in gainsharing. The cost of such an arrangement might be higher than what companies have been paying in the past.
To retain the services of the highest quality IT outsourcing providers, companies must pay top dollar. Businesses will benefit from this investment by getting the services and solutions they need to grow and advance.
The fallout from Russia’s brutal invasion of Ukraine, one of the world’s top technology hubs, will continue in 2023. It is likely that the disruption taking place there will continue to negatively impact those services and, as a result, the ability of companies across the globe to access those services. As a worst-case scenario, other countries that provide these services could be affected as well.
Metaverse technology is still in its infancy. Nevertheless, it is rapidly gaining traction as a means of interacting with customers and prospects. This exciting opportunity for exposure and promotion is not to be missed by savvy organizations. To bring their ideas to life, such businesses need IT assistance. There will be an increase in demand for these services as the metaverse expands.
Partner with the Right Outsourcing Company
It may take a bit of research to find a good outsourcing firm, so begin as soon as you decide it’s something you want to pursue. Consider what you need in an outsourced IT provider. Ask yourself and other leaders: What problems do we need to solve? How important are attributes such as location, time zone, and language to us? What is our budget?
Get referrals from colleagues about outsourcing providers they like and trust. Create a list of potential providers and include their names, contact information, expertise, and anything else you know about them. Perform an online search for vendors that meet your criteria, including those near your location, price, and areas of expertise if that’s important to you. Make a list of any promising possibilities.
The key to finding the right outsourcing partner is knowing what to look for. (Don’t miss our checklist here!)
How do you select the perfect outsourcing partner? If you need help in finding the right outsourcing partner, book a FREE APPOINTMENT with Outsource Asia experts today.