4 Key areas where Outsourcing will emerge towards 2020

Dhrumit Shukla
Jul 25, 2017 · 4 min read

Outsourcing would develop in new areas towards 2020 and beyond, making a new future for the industry.

Towards the year 2020 and beyond, outsourcing would develop in new areas, making a new future for the industry. For many years, organizations have been moving production and other services overseas to benefit from lower costs of production. In the meantime, a more recent development involved outsourcing single-service basic requirements that sit out of the core business of a company, like catering and cleaning.

CREATING NEW OUTSOURCING MODELS

Nowadays, the organizations that are in the forefront of the outsourcing transformation are building new outsourcing models as well as partnership approaches. The collaborations highlight company flexibility and innovativeness. Furthermore, they’re also supporting increased goal and risk shares between client organizations and service providers. The collaborations are driven by strategic intents and the areas of outsourcing are moving nearer to core business aspects. In the future, software outsourcing would evolve to include more strategic aspects.

With the ever-growing technological sophistication across all markets, the outsourcing domain would expand into new service areas, making new opportunities for customers and service providers. Service providers would have to develop new system-wide perspective, which involve complex relationships with some partner organizations and at times serve as deal architects.

PUSHING THE OUTSOURCING BOUNDARIES

The era of outsourcing single activities and operations is definitely not over. However, there are not many non-core activities left to outsource in mature outsourcing markets and industries anymore. Thus, businesses in these markets are beginning to push the boundaries of outsourcing towards more advanced and core business areas, like innovation and idea generation.

4 KEY AREAS WHEREIN OUTSOURCING WOULD EMERGE TOWARDS 2020

  1. TRENDS IN THE OUTSOURCING MOTIVATION. The motivation for opting to outsource would change towards 2020. It will no longer be considered as a concept that could help organizations maintain present non-core activities and make them more efficient. Rather, the key driver of outsourcing would be to innovate and develop better processes with more focus on core competencies as well as market differentiation. Therefore, outsourcing would be utilized to push companies in the forefront of the competition through accessing the best talents, capabilities, resources or new markets and networks.
  2. TRENDS IN AREAS OF OUTSOURCING. Change would be experienced wherein business areas companies opt to outsource. Outsourcing non-core activities no longer is enough as experienced organizations would push the boundary to involve outsourcing core business functions. Of course, this would give rise to new organizational questions and challenges to the way that business relationships that regard the strategic core activities must be structured. Pushing internal limits without ceding control over a strategic direction of the organization would be a challenge.

Nevertheless, there must be no doubts that the ones who make it work would also be the eons who will grab the competitive edge towards 2020 and beyond. With the challenges, business relationships are getting more complex these days, the client companies would set new requirements to the acknowledge specialization and capacity of the outsourcing partners. High specialization degrees would be needed to develop competitive and comprehensive solutions. The number of service providers to solve complex challenges would be higher than what people are used to so far.

3. TRENDS IN THE NATURE OF OUTSOURCING COLLABORATIONS. Although there are outsourcing relationships that would be characterized as more strategic and interdependent, others would take more form of play services and transactional plug, where in client companies pay only for what is used. In more sophisticated relationships, service providers would play an integral role in which direction an organization would go and at what extent. The boundaries between what was defined before as outsourcing and collaboration would blur until they will turn virtually indistinguishable. In other words, the question to source versus insourcing will gradually become obsolete.

4. TRENDS IN THE OUTSOURCING IMPACT ON EMPLOYEES. In line with the fact that companies would continue to find ways to expand agility and flexibility, making the organization more resilient to macro-economic changes, employments would also be more dynamic. The dominant employment model would consist of transparent, collaborative, technology-enabled employees and a fast-cycle manner of doing business via ecosystems and networks of knowledge workers. In this context, outsourcing would be seen as a disruptive force in the labor sector, which would further push forward the freelance economy. While this suits those workforce that are motivated by the desire for self-employment and independence, others would consider themselves on shaky ground.

EMBRACING THE CHANGE

In the ever-changing business environment these days, competencies rapidly become obsolete. Nonetheless, the flexibility that the new ways of outsourcing could open up a whole new world of knowledge and networks for businesses.

The future success of outsourcing would no longer be limited to what companies could do themselves. The future would depend more on the capabilities to embrace and harvest resources for optimum benefit.

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