Published: Apr 1, 2020

In recent years of changing business environments, technological progress and ever-increasing speeds, companies tend to look for IT outsourcing partners to help them with digital transformation. 2020 has divided our world into “before” and “after”. The pandemic of COVID-19 has changed markets and business models, forced companies and customers to rethink their values, aims and goals.

Initial IT Outsourcing Trends in 2020

In the Gartner’s research on IT Spendings, analysts highlighted a clear shift towards subscription services. Businesses want to pay for use rather than to bear the burden of establishing and supporting their own IT infrastructure while still paying licensing fees. So they refuse from ownership of servers and continue moving to cloud-based solutions. The need for automation and optimization of processes results in the finding that enterprise software is still the number one trend amongst the companies’ IT spendings. Companies choose SaaS (Software as a Service) as an answer to the demands of a better customer and user experience for their ERP (enterprise resource planning), CRM (customer relationship management) systems and supply chain management applications. Cybersecurity and privacy software are also top plans, and many businesses have intentions to change, improve or reorganize their current infrastructure accordingly.

So, at the start of 2020, the IT outsourcing industry trends incline to help clients with digital transformations in various areas, such as:

  • cloud solutions implementation and adoption,

  • robotic processes automation solutions,

  • enterprise software,

  • ERP systems,

  • CRM systems,

  • supply chain management applications,

  • cybersecurity solutions,

  • privacy and data protection software.

However, the world has undergone transformation quicker than companies had put plans in place.

IT Outsourcing Trends in 2020 After the Outbreak of Coronavirus

The unstable pandemic situation revealed how vital well-established processes are. For all industries and businesses offline and online. Companies were forced to switch to remote work, reorganize the service they provide, enable digital presence, and there is simply no time for long or slow step-by-step adoption to the new challenges and new technology or software. Not only technological or enterprise businesses now require changes. Non-IT entrepreneurs are in urgent need of digital transformation, and the circumstances are pressing them to move online fast.

Here are some cases to illustrate. If you own a restaurant, the delivery service used to be an option, not the main service, and now the delivery may be the only possible service. Or, maybe, online master-classes from chefs. Or any other service or an idea to transfer restaurant offerings to a digital world. And the popularity of apps, software and services offering food delivery skyrocket.

Or, let’s take a small shop selling shoes or outfits. To survive today, it needs some extra offering, like delivering several sizes of shoes ordered online so that a customer can try on which one fits the best and return others by a courier or a delivery service. But to be able to sell online in the first place, the company needs a website filled with engaging and attractive visual and textual content coupled with a back office suite of business support applications such as Product Catalog CRM and ordering solution or a full-fledged e-commerce solution for small businesses. At the very minimum, it needs a social network profile promoted to a relevant number of followers and staffed with product photos and descriptions. So even small businesses seek software offering support and management of omnichannel sales.

You have evidence of all those instant efforts to survive along the strict quarantine measures adopted in many countries, whereby businesses urgently implement various business support systems:

  • electronic document flow and management;

  • software for online communication and collaboration;

  • task managers and time trackers;

  • platforms for an online school, college, or university lessons;

  • tools for online consultations from doctors, psychologists, or lawyers;

  • free access to libraries, museums, or learning courses;

  • security hardware for airports measuring the body temperature as well;

  • mobile apps to track citizens location and restrict movements;

  • AI-powered mobile apps like COVID-19 Sounds App trying to analyze a voice, breathing, and coughing;

  • neural networks for face recognition training on datasets of people wearing face masks;

  • you name it.

With the pandemic, the IT outsourcing trends have shifted from planned innovations to rapid, immediate, easy-to-implement and affordable intelligent solutions. And there is no surprise, controversy, shock or secret because a need for digital transformation is an evergreen trend, though the time to implement innovations is a luxury now.

Ukrainian IT experts’ attitude to remote work

Ukrainian IT experts’ attitude to remote work

New Tendencies in IT Outsourcing Services

The challenges of the transition to remote work and a need for immediate digital transformation have changed the expectations of IT outsourcing services clients. Being a custom software development provider, we’ve noticed changes in customer’s behavior, as well as in business needs.

  1. Non-IT clients. The number of direct requests for software solutions from non-IT or technological companies increased. Such companies used to hire a local consultant or an agency to assist and guide them through the traps and pitfalls of nearshore outsourcing. During the pandemic, such companies often drop out mediators to accelerate the software development progress, as they do not have the privilege to wait for solutions and negotiate with an extra referral agent.

  2. Offline going online. Many businesses that were offline by nature faced the challenge to rethink their models and go online. Companies need to create digital resonance quickly, including branding, website, social network profiles, design, content and online reputation.

  3. Omnichannel sales. As soon as traditional sales channels drop out from the cycle or become less beneficial, many businesses try to use all possible channels to stay effective, including using social networks for sales or collaborating with courier delivery services.

  4. Ready-to-use solutions. The pandemic changes are so disruptive that they require instant decisions from the business owners. To keep in pace with challenges of the quarantine, businesses now prefer choosing ready-made and easy-to-implement solutions versus custom-developed software. Companies are ready to implement the solution immediately, even if it is not a perfect match, in case the chosen packaged software solves the urgent need in digital transformation.

Reasons to Outsource Digital Transformation

Due to the disruption of the best practices and global transition to remote work, the key reasons to entrust digital transformation and outsource IT innovations are time and price. In the world of remote operation, geographical boundaries, and cultural barriers vanish against the urgency of processes conversions, so businesses tend to outsource their needs.

  • Ensure or establish remote work. Teams need tools and infrastructure to stay connected, to continue effective communication and to collaborate. Companies require software to track progress and manage the load.

  • Improve performance. The replacement of legacy software systems with modern solutions is the burning reason to find a mature outsourcing partner to lead a business through.

  • Eliminate or reduce errors. Trust, loyalty and business reputation are fragile but valuable things, and, in the era of economic instability, companies tend to migrate from wasteful error-prone solutions.

  • Optimize existing processes. Along with online communication and instant collaboration tools required for the transition to remote work, many companies faced the call to implement electronic document flow.

  • Increase speed or time to market. Without automation software, it is a tough task to build digital resonance from scratch for initially offline businesses.

  • Quickly respond to customer demands. To enhance customer engagement, companies should get notified about requests, process them fast and deliver services or products the way a customer selects. Software solutions featuring ordering and billing, warehouse and delivery management are necessary helpers to match expectations.

  • Access to new technology. Hiring an outsourcing partner to implement a technology that a company has not used before or to replace the outdated technology stack with the modern one, can be a time- and resource-saving decision.

Working hours increased on remote

Working hours increased on remote

Concerns of Clients Ordering IT Outsourcing Services

With the world-wide quarantine and all-remote work, distance is not a concern anymore. Companies on the lookout of IT outsourcing services are mostly interested in cost and budget efficiency. However, some points of consideration are still essential, and clients try to regulate and negotiate them with outsourcers.

  • Performance and resilience of the delivered solutions, and how effective, stable, robust and scalable it will be.

  • Data security and loss of intellectual property, especially in cases when the outsourced software is dealing with private, medical or financial data.

  • Compliance of the implemented software with laws and regulations of a country or an area of its application.

  • Contract termination conditions. Customers of IT outsourcing services prefer to have the ability to switch to another provider or to discontinue the service provision without extra penalties or expenses.

  • Cyber risks are as high as a number of sides having access to software systems, so IT outsourcing clients want to avoid possible breaches.

  • Lack of control or power to guide or rule the outsourcing processes.

How businesses address cyber risks when outsourcing

How businesses address cyber risks when outsourcing

Tips How to Cope With Biases Against IT Outsourcing

So, what businesses should do to implement digital transformation while protecting themselves as much as possible from instability.

  1. Transform. Be flexible and adaptive, change the current business model or pattern, and incorporate innovative software solutions to keep up with the changing environment. If you used to be an offline company, take the opportunities of online presence, exchange electronic documents, communicate online, add social networks to your sales channels, or integrate with the omnichannel commerce platform. Find out if modern technology trends are applicable to your case or follow Industry 4.0 trends. Some can implement AR or VR and provide your customers with a virtual trying on feature for selling shoes, outfit or furniture online. Ask yourself how AI, ML, face recognition or IoT can fit your business.

  2. Trust but verify. Choosing an IT outsourcing services provider, even if you are short on time, check all the aspects that you can, visit the potential partner and see an office, or schedule a video conference with the prospective team. Every business runs specific processes and operations; to make sure an IT outsourcing company can cope with them, define your industry-specific requirements and look for an outsourcer with the experience in the field. To choose a reliable provider, you also should credit some trust to a possible partner, so if you have had some previous negative experience, you may share it and invite an outsourcer to discuss measures to prevent it from recurring. Select an IT outsourcing partner considering your current and future needs, how big it should be, what tech stack and skills it should possess, how experienced it is. Ask a chosen software development company any questions that bother you or are essential for you.

  3. Foresee and analyze. If there is a risk that may disrupt or ruin your business, think about how you and your IT outsourcing company can protect your business and help you to avoid losses. Analyze the business environment of the country where your outsourcer operates, how often Internet shutdowns happen there, are there electricity blackouts, or what is the population attitude to the spreading 5G. Ask your IT outsourcing service provider about duplication of connection channels, access to the satellite, reservations of technical infrastructure and backups. If you need any additional protection measures or steps, discuss opportunities to include those.

  4. Track the progress. Before outsourcing the development or implementation of software solutions, define critical points you will need to check and control, and, signing a contract, negotiate how you can track the ongoing progress and what are the best practices to follow the development stages. Be proactive, use tools for online communication and video conferencing, apply any relevant e-doc flow, track tasks and loads with appropriate software, use mind maps, timeline, or any other methods to visualize how you move toward your goals.

  5. Accept and validate the result. Ensure your digital transformation is flawless, check whether the delivered software matches your expectations, features all the functionality you need, test the solution onboard. If there is a necessity, run an independent audit. Do everything you can to ensure that you get what you ordered, but in case of nonconformity with your business values, double-check agreements with your IT Sourcing partner, before opening claims.

  6. Be persistent. The world is constantly changing, so is your business. Any solution or digital transformation you implement will require updates and improvements. Plan the backlog of features for your software beforehand, think of potential growth of customers or loads, or volumes, arrange potential upgrades, predict market tendencies and have improvements in mind. If you contracted a full-stack and full-cycle software development company, ask your partner to help you with business and system analysis.

To Sum Up

Innovation and digital transformations are the distinct trends for businesses to move forward anytime, but in disruptive times, it is a vital option and an urgent need. IT outsourcing is a beneficial way to implement intelligent changes in your business, hand by hand with a reliable partner.

We are a team of software mavens with above ten years of practice in the development and integration of complex industry-specific software solutions. We deliver for clients from ten countries, and our software serves businesses from the Telecom, Fintech, Real Estate, Digital Commerce, Publishing and Shared Economy verticals. SYTOSS may be the right choice and a reliable partner on your way to digitalization.