On-chain IT Outsourcing
Many among us left the traditional IT Industry to build a more efficient and fairer digital world. After years of innovation, decentralised app development has reached a high level of maturity. Naturally, as our dApps evolve and serve larger user base, outsourcing some of the work becomes essential. Yet the available IT outsourcing models remain fairly outdated and could benefit from a smart contract powered upgrade.
In this article we analyse why the old model is failing and how a Web3-aligned approach can save the day.
The Broken Model:
I’ve spent years in SaaS sales, and know how painful it is for a client to evaluate different technology providers, select an adequate System Integrator and suffer through undelivered promises and missed goals. The challenges can be broken down into 4 parts:
Manual and Inefficient Proposal Processes
Picture this: you’re sifting through piles of proposals, each more confusing than the last. It’s like trying to find a needle in a haystack, but without the fun. Traditional outsourcing demands a ton of manual effort, leading to errors and delays. According to Deloitte, there’s a growing need for more dynamic and efficient processes. A tech purchase can take up to 9 months for some large organizations between RFPs and negotiations. In the words of my favorite book on the subject “RFPs Suck!” and automation can make it less so.
Lack of Transparency and Integrity
Ever feel like decisions are made behind closed doors? Traditional outsourcing often involves shady backroom deals, leaving you in the dark. In our SaaS sales team we had a rule to live by: “If you haven’t written the client’s RFP yourself, then don’t waste your resources biding on it”
This lack of transparency can lead to sky-high costs and less-than-stellar performance. Numerous studies highlight the struggle with opaque pricing and contract terms. Transparency is indeed the #1 quality most outsourcing companies seek.
Static and Inflexible Contracts
Most IT service providers still rely on annual subscription contracts and upfront scope of work commitments. Imagine being stuck in a rigid contract that can’t adapt to your changing needs. Frustrating, right? Traditional IT outsourcing agreements are often as flexible as a brick. According to an IDC report, these models fail to keep up with evolving business demands, leading to inefficiencies and missed opportunities.
Opaque Price Discovery
Ever get the feeling you’re paying too much but can’t see why? Traditional IT outsourcing models often lack transparency, making it hard to discover fair prices. As noted by Taskforce Outsourcing, competitive and clear pricing models are key to unlocking the full benefits of outsourcing.
A New Approach: Web3-Aligned Adaptive Outsourcing
The pillars of web3, decentralization, transparency, and community governance can play a pivotal role in building a new Outsourcing model that best fits the dynamic nature of the crypto Industry.
Decentralization and Trustless Systems
In Web3, we trust code, not intermediaries. A modern outsourcing model should leverage decentralized technologies to automate proposal and evaluation processes, reducing manual effort and minimizing errors. Smart contracts on blockchain networks ensure agreements are executed transparently without human intervention. Trustless systems FTW!
Transparency through Open Ledgers
Distributed ledger technology (DLT) creates immutable records of all transactions and agreements, giving everyone a clear view of the process. This openness fosters trust and ensures contracts are built on solid benchmarks and performance metrics. Moreover the historic performance of a Service Provider can guide future projects to selecting reliable partners incentivized to maintain high reputation.
Dynamic and Flexible Agreements
Flexibility is key in the fast-paced world of crypto. Adaptive outsourcing contracts in Web3 evolve with your needs, including provisions for periodic reviews and adjustments. This ensures your agreements stay relevant and effective, even as the tech landscape shifts beneath your feet.
Crypto-native applications strongly correlate economic value to on-chain transactions. IT Services costs need to be equally aligned to the result and quality of each transaction executed on the technology stack they are offering, rather than rest on a static locked-in client agreement, without means to contest its poor performance.
Competitive and Transparent Pricing
Web3’s decentralized finance (DeFi) primitives offer transparent and competitive pricing models, reducing reliance on traditional intermediaries. This ensures you get the best bang for your buck. On-chain analysis of service performance correlated with service costs should guide how we pay our service providers. As well as allow competing providers to optimize their proposals to win the client’s business by offering better and cheaper solutions.
Community Governance and Incentive Alignment
DAOs (Decentralized Autonomous Organizations) bring governance into the hands of stakeholders, ensuring transparency and aligning incentives between users, developers, and stakeholders.
Every crypto project brings together an app, its users and partners to deliver a delightful and valuable experiences. Token economics should play a key role ensuring everyone has skin in the game.
Conclusion
The traditional IT outsourcing model is on its last legs, especially in our fast-evolving, decentralized world. By embracing a new outsourcing approach that emphasizes decentralization, transparency, flexibility, and competitive pricing, we can unlock the full potential of Web3 technologies. This shift is essential for staying agile, driving innovation, and achieving sustainable growth in the digital age.
