Outsourcing trends. Forecast for 2020

Original author: Flatworld Solutions
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If you have already used outsourcing in the past or plan to start in the near future and at the same time worry whether this form of cooperation will pass the test of time, then now you can be calm. Outsourcing will definitely not disappear.

In this article, you will learn how to survive the outsourcing crisis and what its future holds.

A brief excursion into the history of outsourcing

Outsourcing, of course, has led to revolutionary changes in business approaches. At first, only tasks that did not carry significant risks were transferred to outsourcing, for example, payroll or data entry. Then there was a massive outsourcing of contact management and customer service processes.

Cost saving through outsourcing has become apparent, and more and more companies are paying attention to it. Transnational companies that sought to save money began to transfer high-level tasks to reliable partners, including IT services, healthcare business processes and research projects. But today, outsourcing has become more than just a way to attract cheaper labor. It became the basis of business strategies of both small and large companies, which consider it necessary to 100% concentrate on their key business operations and transfer everything else to specialized service providers. Outsourcing has become one of the main factors in the rapid development of business in countries such as India, China, the Philippines, and Mexico.

Outsourcing: to be or not to be?

Most companies in various vertical industries confirm the benefits of outsourcing, however, discussions continue regarding the sustainability of such a business model in the long run. Outsourcing advocates argue that the negative consequences of this process include a lack of quality control and project management capabilities, as well as a narrowing of the scope for innovation. Opponents of outsourcing say that salary growth makes outsourcing less attractive and in the long term, such cooperation may be unprofitable.

Despite these negative trends, the outsourcing market continues to grow. Currently, it is used by companies of any size and line of business. Startups and large enterprises resort to outsourcing to gain a competitive advantage in the framework of their business scenario. Enterprises are starting to use many platforms, including cloud technology, social networks, mobile solutions, etc., and stakeholders are becoming more and more distributed geographically. In such a disparate environment, outsourcing was still able to adapt to rapidly changing business environments.

Crisis in the business sector only contributed to the further development of outsourcing. The recent global economic crisis has shown that companies need not only to learn to survive during periods of economic downturn, but also to seek new ways to overcome problems and achieve success in such a situation. Given the current situation, the motto for many will be “outsource and survive,” in addition, it is necessary to ensure effective management of your outsourcing projects and do everything possible to get ahead of competitors.

The future of outsourcing

  • Relations in the outsourcing format have become more standardized, and now the parties are more focused on people and processes than on prices. This allows outsourcing service providers to look confidently into the future.
  • The need to reduce costs will lead to the emergence of outsourcing contracts, which will include flexible agreements on the level of service (SLA) and the volume of services provided.
  • Small enterprises, start-ups and companies in the SOHO format (from the English Small office / home office - “small office / home office”) will more actively use the advantages of outsourcing, increasing operational efficiency and reducing time to market.
  • Rising prices for oil and other raw materials, as well as transportation services, will force companies to explore outsourcing opportunities, as they will be forced to reduce operating costs.
  • More and more critical high-level business functions will be outsourced in the next decade, and the low-level functions outsourcing market will stabilize.
  • Latin America and Europe can compete with India as a major provider of outsourcing services.
  • With the increasing spread of outsourcing services based on cloud computing, support and development services will become more and more in demand.
  • In order to reduce costs, manufacturing and pharmaceutical companies will prefer areas that will take advantage of low labor and operating costs. In addition, huge outsourcing potential will also be actively used for outsourcing research and development in these industries.

Will outsourcing disappear in the coming years? Definitely not. Outsourcing service providers can confidently face the future, as they provide their customers with access to specialized skills and not only save their time and resources, but also allow them to focus on solving key business problems.

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