Outsourcing In The New Normal: Three Trends Reshaping The Global Industry

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Outsourcing In The New Normal: Three Trends Reshaping The Global Industry
Outsourcing In The New Normal: Three Trends Reshaping The Global Industry

Date: 29.03.2018

Not too long ago, outsourcing technology projects to offshore partners, whether in Asia, Europe or beyond, was a conventional and largely uncontentious practice for many U.S.-based businesses. What a difference a few years, an election and a Brexit referendum can make. Today there is a new normal across the global marketplace that has trickled down to CIOs, their technology teams and their approach to outsourcing tech support.

The most disruptive change agent for the outsourcing industry was the 2016 election of Donald Trump. The new administration’s focus on putting American interests first, limiting immigration, pulling out of the Trans-Pacific Partnership (TPP) agreement and encouraging businesses to invest in American operations had a ripple effect across the tech outsourcing industry, which depends heavily on global talent and overseas operations. Today the industry is operating inside a tentative new normal that is putting tech outsourcing in flux. What does the path forward look like for businesses that take advantage of outsourced IT services and talent to reach their tech goals? Decidedly more American and hungry for emergent skills, the industry is changing, and so are the key trends shaping where, why and how businesses outsource.
The Where Trend: Repatriation The fear of being penalized by the U.S. government for using resources from other parts of the world has driven many companies to repatriate tech outsourcing. In 2016 and 2017, leading outsourcing service providers, such as Infosys and Cognizant, laid off thousands of workers in India and other regions where they had built thriving outsourcing centers. Then they began hiring talent on U.S. soil, setting up outsourcing centers in remote, small U.S cities to build a presence and utilize local talent. At odds with the old outsourcing model, which was designed to provide access to skills that could not be found locally or hired affordably, the success of this new model depends on the quality of the talent resources in more remote regions across the U.S. Whereas offshore centers overseas were often located in Silicon Valley-esque regions such as Bangalore, India, or Ho Chi Minh City, Vietnam, where tech talent resources are abundant, onshore outsourcing centers have been established in places where costs (real estate, operations, salaries, etc.) can be contained and sufficient tech talent has traditionally been hard to find.
Why is this a trend to watch? Because it will reveal exactly how critical the U.S. tech skill shortage is. If the talent, cost savings and capabilities are there, then the repatriation of outsourcing centers to small U.S. cities will not impede business growth and innovation. If it doesn’t work and innovation stalls, this trend is much more likely to be a fleeting one, as businesses will once again get comfortable going beyond borders for tech resources and support.   https://www.forbes.com/sites/forbestechcouncil/2018/03/21/outsourcing-in-the-new-normal-three-trends-reshaping-the-global-industry/#380742b253fa

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