Originally, the primary motivation to outsource software development was to achieve lower labor costs, but continuing and emerging business and technology trends in 2016 are leading to new client requirements on outsourcers. When choosing an outsourcing partner, more and more businesses are looking for closer alignment to their business goals, flexibility demands and quality requirements.
Thus, clients are evaluating outsourcing companies via increasingly sophisticated criteria. The smartest software providers are reciprocating by developing new service models while taking advantage of many of the same technologies driving these current trends.
1) Moving from Hours to Results
In order to ensure that enterprises are getting what they need for their money, most are now seeking out providers who operate on a results-driven model versus rates based on time. Furthermore, clients are demanding that payment schedules be based on satisfactory achievement of those results versus upfront fees or retainers.
2) Greater Flexibility
Clients are looking for providers who provide on-demand services without locking them into long-term contracts or volume commitments. This enables client companies to respond more efficiently to rapidly changing market demands. In response, development providers who are moving operations to cloud resources are the ones most likely to adapt to the increased demand for flexibility.
3) Utilization of DevOps Practices Continues Apace
DevOps continues to attract adherents as it goes mainstream in up to 25 percent of companies this year, according to Gartner. Most of the IT departments in these organizations are transitioning to a service center model. Service providers who already operate in this manner will more easily blend into these organizations’ processes and decision-making apparatus.
4) Security Risk Perception Increases
A key concern within any outsourcing strategy is security. With the growing presence of the Internet of Things and the potential for an exponentially larger attack surface, software development outsourcing companies must ensure that their own security vulnerabilities are addressed in a manner that will win the confidence of client decision makers. Demonstrating solid track records and establish policies is of high importance when selecting a vendor.
5) Managing Infrastructure as Code
Amazon’s AWS has enabled the application of software development change management systems to development and deployment infrastructure. AWS is dedicated to making this paradigm increasingly easier with new APIs and services. Outsourcers who adopt this practice are reaping large benefits in their software support, testing and deployment efficiency by synching servers, storage and networking infrastructure to precise versions of the source code.
6) Multi-Sourcing Technologies Impacts Integration
Client companies are utilizing a more complex mix of software products and services this year. This multi-sourcing of technologies presents in-house management challenges, and a rise of new vendor management offices. The challenge for software providers is meeting new performance and integration standards from VMOs. Compliance failure may result in the outsourcer being dropped in the interests of streamlining operations.
7) Business Process Outsourcing Being Replaced by Robotic Process Automation
The software outsourcing industry in 2016 will continue to feel the influence of the rise of RPA. In fact, one of RPA’s touted benefits is the reduction of outsourcing, especially via cloud-based RPA services. Those outsourcers who can adapt by offering relevant automated services in the most responsive, scalable and efficient manner are the ones who can survive and profit from this trend.
8) Outsourcing Selection is Speeding Up
Along with the adoption of agile methodologies within software development, business decisions are also being made with more agility and higher velocity. Outsourcers will increasingly recognize this trend as more clients endeavor to close smaller deals faster in order to stay ahead of their competition.
9) Adept Companies Are Being More Selective with What They Outsource
Many organizations who originally turned to outsourcing to compensate for a lack of internal expertise and resources have grown more sophisticated over time. They are progressively learning to be more selective regarding what to do in-house versus handing off to an outsourcing provider. Organizations are looking deeper into what their core competencies are and what they can outsource to make themselves more efficient in-house. Their motivations are usually the desires for greater flexibility, responsiveness or cost reductions, all of which software providers need to be sensitive to in contract negotiations.
10) Outsourcing Company Accommodation Increasing
It is no longer the case that companies seek out only the lowest cost provider. Sophisticated outsourcing companies will respond tactically and strategically to all the trends discussed here to grow or to survive. This trend can be seen in the greater tendency for outsourcers to adapt and adjust terms or offer new services in an effort to deliver the best product and service.
The outsourcing industry is more fluid than ever this year with clients focusing less on price per se and more on results, quality, integration, security and agility from software development providers. As you adapt to your own fast-moving markets and the rise of paradigm-shaking technologies such as IoT and on-demand infrastructure, so do we. Optimus stays two steps ahead in order to support your business in all your software and IT requirements.
At Optimus, we consistently stay on top of these trends while leveraging the forces driving them to bring you the solutions you need. Contact us to help with your next development, testing, cloud, BI or mobile project.