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Recent outsourcing trends

Outsourcing has become very popular in the last couple of decades, especially within the IT industry. Globalization and wide availability of services are making it increasingly easy to export production. In developed economies like USA and Western Europe the prices for IT services are ever-increasing because of the difference between the demand and supply of such skills. On the other hand, the lucrative nature of careers in high-tech and software development makes it a popular choice for professionals in less developed countries. As a result both small and large companies are outsourcing development, infrastructure and IT management.

At Eastsource we pay close attention to outsourcing market developments and make sure our partners commit to best practices. This is the first in a series of posts dedicated to IT outsourcing trends.

People driven outsourcing trends

Destinations

There has been a lot of movement in the outsourcing industry. Ten years ago India and China were the most common destination to outsource. Although they are still popular because of the low prices, countries like Bulgaria, Romania and Ukraine are performing equally well nowadays, if not better. The high quality services, familiar working culture and closer proximity of Eastern Europe compared to Asia has led to an outsourcing boom in these countries.

Flexibility

Another outsourcing trend is flexibility. As a result of the developments in the industry software companies have become very flexible. Back in the day most projects had fixed price – you pay half of the price upfront, wait for several months and when you receive the product you pay the rest. This approach, however, has proven to be far from efficient especially for big projects. It not only reduces the control over the product and its quality but most of the time it ends with the dissatisfaction of both parties. With the emergence of agile technics the way we do software projects has changed. Nowadays most companies use SCRUM, Test-driven development (TDD) and other similar practices. This allows for better control on the development, deadlines and quality of the final result.

Project types

New project types like “Times & Materials” and Dedicated teams have emerged. Outsourcing companies offer their clients the option to choose between long-term teams or to just pay per hour for the service without much attachments. Depending on the needs of the project each of these types has its benefits. Because of this it is very important to decide one the right project type before starting your outsourcing relationship.

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Technological outsourcing trends

Open source and SaaS

Innovation and technological advancement has led to a whole other group of outsourcing trends. For example open source software solutions have gained a lot of the market share of the big enterprise software kits from last decade. The main reason for that is the big community behind the concept. The perception of open source has moved from “less secure” to “the community know what they are doing”. Another example is software-as-a-Service (SaaS) which has become a viable alternative to custom-built solutions. Most small and medium enterprises today consider out of the box solutions. The reason is that buying a license is always cheaper than building something from scratch. Furthermore there is no need of complicated installations and configurations since most SaaS solutions are cloud based.

Cloud computing

Speaking of cloud computing, it has established itself as the norm in IT services and infrastructure. No longer there is a need for large upfront investments and maintenance of in-house servers. Even big corporations are migrating to the cloud because of the lower risk and ease of access. This does not include only hosting and infrastructure but also various financial and organizational activities.

Standardization

Another outsourcing trend in recent years has been the standardization of requirements for user interface and experience. Think about how many similar elements there are between most software systems. Even Apple’s iPhone and Google’s Android phones are becoming almost identical. Most of the time companies prefer to use the dominant design on the market instead of risking their investment with new user experience. This helps a lot with outsourcing – if there is something out there that you like, just use it in your requirements explanation as an example. It is always easy to see firsthand how a system should work.

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