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The GS 100 survey highlighted the fact that IT outsourcing market is on the way to transformation. Although growth rates remained under pressure the overall market size was intact, presenting a positive picture. But what is happening currently in the US market is triggering uncertainties and it will be interesting to see what way the IT outsourcing industry takes from here.
In the meanwhile, enterprises are likely to be treading a cautious path and service providers will be seeing increasing challenges to attract and retain customers.
There is a visible shift and preference towards smaller contracts. In most cases, enterprises today are looking at the offshoring route, as cost saving remains the prime objective. But that in itself might not ensure success. To ensure that partnership delivers the desired results, enterprises must choose more carefully. Offshoring can have its own challenges. Contractual terms and laws might differ in different regions. So a good understanding and effort is required to be put in this area. Also, there exists in most cases, a cultural divide that companies might have to deal with.
The mid market companies often find IT outsourcing, especially offshoring, an even bigger challenge, which results in most of the IT work being retained in house or given to local service providers. In order to tap this market, providers will have to offer services specific to their needs and requirements.
Service providers are of the opinion that Cost savings though an important consideration should not be the sole objective behind an outsourcing contract. Quality of service, timeliness and access to better technology solutions are other factors that can have a wider impact. Those players that will be able to deliver strategic advantages, have domain expertize and global delivery capabilities will have an edge over others.
Michael Minkevich, Vice President of Technology Services, Luxoft says, “Many companies will be looking for providers with deep expertise in mobile platform development, R&D, high-end software and application development engineering skills, as well as experience in development methodologies such as Agile and SCRUM.”
Considering the current trends, where companies are cautious about their outsourcing decisions, competition amongst providers is on the high and expectations are going up, innovation is going to be the key decision maker. What new can a service provider bring to the table will be a question being asked unanimously.