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Top 10 Forces that will Impact the Future of BPO and IT Outsourcing

by: Admin

Tuesday, September 14, 2010 |

Gartner Inc., one of the most prestigious IT research and consulting firms in the world, recently came out with their analysis on the factors that set the course of the IT services and outsourcing industry. Gartner Research Vice President Benjaming Pring says that there exists one common set of technological forces and market principles that all players and parties in the IT services market deal with.

Factors to impact IT outsourcing and the BPO industry

These technological forces have been said to continuously change the industry landscape:

1. Hyperdigitization - This can be seen as the growing influence of digitization in the global economy. Digitization is the representation of products and services that are digital in form. This has made information easily transferable regardless of geographical location; thus, it is expected to develop rapidly and in 10 years, constitute 25 percent of the global gross domestic product.

2. Globalization - Globalization has changed the business practices and service delivery models within the IT industry. This force has changed the lives of the global business sector and everything else they interact with. Anyone who does not want to stagnate and get left behind should acknowledge, embrace, and take part in globalization. IT ought to see the world from this perspective so technologies can be used for greater efficiency and the global workforce can be tapped into for innovation in products, services, and processes.

3. Consumerization - “Consumerization will dictate IT access standards.” Consumer-oriented technologies have altered the lifestyle and behaviour of consumers. The effects of consumer behaviour can heavily impact and ultimately reshape the development of enterprise IT. As such, enterprise IT strategies should be aligned with the buying behaviour of consumers in order to create technologies, products, and services that address their needs and adapt to their lifestyle.

4. The Cloud - Cloud computing, according to Gartner, is "a style of computing where scalable and elastic IT-enabled capabilities are provided 'as a service' to external customers using Internet technologies." Specialized needs in IT can now be supplied by third party providers in a manner that is standardized and less costly in terms of capital investments. The main advantage here is that buyers can focus on the services that are provided to them, instead of the support and management of physical infrastructure.

5. Intelligence Technology - IT should be developed and utilized to advance business operations, to acquire opportunities for growth, and to improve the service and procedures within an enterprise. The current focus of IT is in “business intelligence, analytics, pattern recognition, and smart solutions.”

6. Security and Privacy - The availability of information and rapid digitization has led to increasing cases of privacy infringement and likewise, the need for security against hacking activities and identity theft. Levels of security within Internet activity should be improved in order to further maximize the advantages of IT and to ensure the development of its use.

7. Compentization - IT has allowed for the conception of “reusable objects”, also termed as “prebuilt IT components”, that people can access and use instead of starting from a clean slate.

8. Hypercompetition - Hypercompetition occurs because technology has allowed vast information access and a lot of other factors that influence buyer decision-making. While competition drives better quality at lower costs, the downside for suppliers is that the differentiating factor they create can be easily outperformed. This creates a fast-changing buyer market and an ongoing challenge for suppliers.

9. Value Chain - The delivery of IT services is directly impacted by service value chains. Gartner recommends business owners (and the rest of the IT outsourcing consumer market) to evaluate their service provider’s value chain. Providers themselves should examine the value chain of other industries to come up with innovation.

10. Hyperverticalization - Movement towards further specialization of vertical service processes is said to be inevitable in the IT industry. While this may cause market fragmentation, this is also likely to lead to “vendor-led innovation” and improved services for consumers.

Allie Young, vice president and analyst at Gartner, says business owners should take advantage of the opportunities for innovation and service line growth that can be brought about by these forces.

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