Outsourcing, a practice dating back to the 1960s, has significantly transformed. Originally a cost-cutting measure, outsourcing allowed businesses to focus on their core competencies while leaving technical tasks to specialised external firms. This evolution is particularly noticeable in the field of Information Technology (IT).
The focus has shifted from mere cost reduction to fostering innovation—adapting to new technologies, and remaining agile in a tech-driven world. Adapting to the latest outsourcing trends is no longer optional but essential for business leaders and IT managers who rely on outsourcing. They could get left behind in this rapidly evolving industry if they don’t.
That’s why this article delves into the key IT outsourcing trends of 2024. We’ll explore how these trends are empowering businesses to not only stay ahead of the curve but also redefine their competitive edge.
For us to anticipate where IT outsourcing is going, it is important to take a look at how it started. Here are a few of the key events that led to what outsourcing is today:
- In the 1990s, Kodak tasked IBM with designing, building, and managing a data centre. As Kodak was a well-known company, many others followed suit.
- As a result, this period saw a surge in IT outsourcing. However, outsourcing was also not considered kindly back then, especially since it was predominantly done by companies to save costs.
- The 21st century brought a paradigm shift in the perception and utilisation of IT outsourcing. It was no longer just a way to save money—it became a key strategy for driving innovation and staying competitive. This change meant that companies now used outsourcing to cut costs and access new technologies and innovative ideas.
Today, IT sourcing has a completely different face:
- Businesses have started diversifying their IT outsourcing by working with large, established and smaller, more agile companies. This mix allows them to benefit from unique skills and the latest technologies, helping to drive innovation.
- Managing different IT suppliers has become more complex but also more strategic. Companies use IT outsourcing to enhance their own capabilities, capitalise on business opportunities, and achieve greater efficiency. This approach is crucial for keeping costs down while ensuring high performance and staying ahead in the fast-changing tech world.
In short, IT outsourcing has become an essential part of modern business operations, helping them innovate and lead in their markets.
Having seen how IT outsourcing has changed over the years, let’s now look at what’s poised to happen in 2024.
Key IT outsourcing trends in 2024
As we enter 2024, several key trends are poised to disrupt the industry. These trends will shape how companies leverage outsourcing to drive strategic advantages and keep pace with innovation.
The rise of cloud-native outsourcing
The rise of cloud-native outsourcing has been marked by the increasing adoption of cloud technology in IT outsourcing—particularly Infrastructure as a Service (IaaS).
Cloud-based outsourcing solutions have become more popular, with companies harnessing multiple cloud providers to diversify risk and enhance redundancy. What does this mean? Cloud technology has evolved beyond convenience. It’s now an integral element of IT infrastructure with benefits such as:
- Improved scalability: Cloud-based solutions allow businesses to scale their IT infrastructure and resources as needed, making it easier to handle fluctuations in demand.
- Cost-efficiency: Cloud services can help companies reduce costs by eliminating the need for on-premises hardware and maintenance.
- Enhanced innovation: Cloud technology enables businesses to access cutting-edge technologies like artificial intelligence, robotics process automation, and machine learning.
As cloud-native outsourcing continues to evolve, expect also to see the integration of serverless computing and containerisation technologies in cloud services. Serverless computing allows developers to build and run applications without worrying about the underlying infrastructure, while containerisation enables packaging applications and their dependencies into lightweight, portable containers.
These technologies will further enhance cloud-based outsourcing solutions’ flexibility, scalability, and efficiency.
Enhanced focus on cybersecurity
With everything going online, the threat of cyberattacks is growing. Therefore, there is a growing need for specialised expertise and specific support in cybersecurity, such as threat monitoring, analysis, and incident response planning.
Some cybersecurity methods and approaches rising in popularity include:
- AI-powered threat detection can help identify and respond to potential threats in real time by analysing large amounts of data and detecting patterns that may indicate a cyber attack. This then allows companies to take proactive measures to protect their systems.
- The Zero-Trust Security Model assumes that no one inside or outside the network can be trusted, requiring continuous verification of every user and device before granting access to sensitive data.
The benefits of outsourcing cybersecurity services include access to specialised expertise, cost-effectiveness, and the ability to focus on core business functions.
As the landscape of IT outsourcing continues to evolve, we can expect to see a continuous adaptation and proactive approach to cybersecurity in outsourcing partnerships. Companies will likely prioritise working with vendors with a strong track record in cybersecurity and who can provide advanced technologies and expertise to protect their systems and data.
Integration of AI and automation
AI and automation continue to play an increasingly important role in IT outsourcing. After all, using AI for IT outsourcing has improved operational efficiency and cost-effectiveness and propelled businesses into the digital era.
Here are some examples:
- AI has enabled data analysis companies to streamline operations by automating routine tasks, minimising errors, eliminating human dependencies and unlocking unparalleled insights. That way, they can be sure that the data they gather—and how they interpret it—is more accurate.
- AI-powered software robots, called Robotic Process Automation (RPA), can take over rule-based and repetitive tasks, allowing human employees to focus on more complex and value-added activities. This speeds up software development.
- In customer support, AI has facilitated the development of smart applications, chatbots, and virtual assistants that enhance user experiences, provide seamless customer support, and enable efficient self-service options.
Expect to see continuous integration of AI and automation in outsourcing partnerships. This proactive approach is essential to addressing the evolving digital landscape and staying ahead of the competition.
Data privacy and compliance
Of course, with the continuous digitalisation of the world comes new regulations. The IT outsourcing landscape is increasingly influenced by data protection regulations like the General Data Protection Regulation (GDPR) in the EU and the California Consumer Privacy Act (CCPA) in the US. These regulations significantly impact outsourcing practices, placing a high priority on data privacy and compliance.
How will this trend impact businesses?
- Organisations engaging in IT outsourcing must ensure their partners comply with these regulations. This compliance involves adhering to strict privacy standards for handling, processing, or storing data. Non-compliance can lead to severe penalties and reputational damage.
- In response to these regulatory challenges, there will be an increased adoption of advanced strategies and technologies for data security and compliance in outsourcing. Companies will invest more in secure data transmission, robust encryption, and regular compliance audits. They will implement comprehensive data governance frameworks to establish clear data handling and processing policies.
- Additionally, outsourcing providers are turning to technologies like blockchain for better data security and transparency, and AI-driven tools for continuous monitoring and real-time threat detection. These measures are essential not only for compliance but also for building trust with clients who are increasingly concerned about data privacy.
The looming impact of economic challenges
Economic uncertainty is influencing the IT outsourcing landscape in these ways:
- Businesses are seeking more flexible and adaptable outsourcing models to mitigate risk. For example, trade tensions, oil shocks, or sudden changes in interest rates can create uncertainty and volatility. Hybrid models with onshore, nearshore and offshore delivery also allow companies to stay nimble in responding to such fluctuations.
- The shift to remote work has spiked demand for outsourcing services that enable distributed teams. Key needs include cloud computing, virtual private networks, collaboration tools and cybersecurity. Providers that can support the remote work paradigm can capitalise on this demand.
- With data security threats growing, businesses need more outsourcing expertise in areas like threat detection, incident response, and compliance. Providers showcasing cybersecurity strengths will be well-positioned to help clients navigate economic turbulence.
Navigating the future of IT outsourcing
As we look towards the future of IT outsourcing, businesses must strategically position themselves to leverage emerging trends for growth and innovation.
Here are two things to consider:
Strategic implications for businesses
Businesses should stay informed about the latest developments in IT outsourcing, such as the trends mentioned above. By aligning their outsourcing strategies with these trends, companies can drive innovation, improve operational efficiency, and gain a competitive edge. Failure to do so means being left behind by the competition.
If you haven’t yet, start looking for outsourcing partners who offer flexibility and agility. They should be able to scale services up or down based on demand and who are quick to adopt new technologies and practices.
Choosing the right outsourcing partners
Selecting the right outsourcing partners is crucial for businesses looking to stay ahead. When choosing one, it is essential to ensure they are in tune with the latest industry trends and can align with your specific business goals. Partners should clearly understand advancements in areas like cloud technology, AI, and automation and how these can be leveraged to benefit your business.
Aside from that, businesses should prioritise those with robust security protocols and compliance with international data protection regulations to protect sensitive information and avoid legal issues. Evaluate their track record, looking for successful projects and client satisfaction, which indicates their capability to deliver quality services. Ensure they align with your company’s culture and values, as effective communication and cultural fit are crucial for a productive relationship. Finally, opt for partners who offer flexibility and scalability in their services, which is essential for adapting to business growth and changing market conditions.
Partnering with established firms such as CXC, which has over 30 years of contingent workforce management experience, can make these processes easier. Our extensive international network and proven track record in managing complex workforce solutions can be invaluable, especially when dealing with global outsourcing needs.
Our expertise in compliance, risk management, and talent engagement can give your company a significant advantage in navigating the complexities of modern IT outsourcing.
The evolving landscape of IT outsourcing in 2024 presents a unique opportunity for businesses to go beyond cost-saving and embrace innovation and competitiveness. With various trends reshaping the industry, it’s crucial for businesses to actively engage with these changes.
Businesses must seek outsourcing partners who are aligned with these trends and demonstrate agility, technological proficiency, and a strong commitment to data security and regulatory compliance. We’ll help your organisation harness the full potential of IT outsourcing, ensuring it remains competitive and innovative in a rapidly advancing digital world. Reach out to us today.