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Why Businesses are Bringing IT Processes Back In-house

by: Sarah Joson

Tuesday, March 17, 2015 |

Nowadays, companies have taken a different approach when outsourcing IT processes. They are now more welcoming when it comes to the delivery models, processes, and approaches of IT outsourcing. For instance, there’s the multisourcing approach in which a company deals with several different providers. Also, they are more willing to sign shorter-term deals, or have taken the initiative to pull back parts of their IT processes.

Rise of insourcing in the global IT sector

ChannelWorld.in shares the article written by Stephanie Overby which covers the rapid rise of insourcing in the global IT sector.

Mike Slavin, Managing Director of outsourcing consultancy Alsbridge, said innovation is linked to the movements in insourcing. He said these changes become more noticeable in second and third generation renewals.

It was then discovered that more and more businesses are seeking innovation in their processes, and with outsourcing, innovation efforts are just not enough. Outsourcing providers, on the other hand, are protesting, saying clients do not fully understand what innovation entails. Also, innovation has no place in traditional outsourcing models.

Slavin also pointed out that whatever cost issues faced by providers, they address those by updating the budget of their internal operations, or their costing/propositions, just so they could win deals. This could be beneficial for them at first, but it leaves account managers helpless when it comes to designing groundbreaking ideas and projects. Also, it is very unlikely for a deal to have an innovation committee or even a separate budget to drive innovation.

Slavin cited what traditional tech giants such as IBM and HP did - both transferred human and physical assets to the provider. This is said to thwart innovation. Indian providers, on the other hand, designed business models on labor arbitrage and competitive price points, but it also resulted to foiled innovation.

Cloud played a major role in shaping the tech world to what it is today. Even veterans who survived many layoffs are dubbed as cloud or mobility experts, when in reality, clients need to meet fresh faces who are well acquainted with the latest in technology.

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