IT outsourcing in Capital Market

Outsourcing took over the world by storm, just a few years after it first became a thing. The history of outsourcing can be traced back to when Kodak, the popular camera manufacturing company, outsourced most of its technology systems in 1989, and was followed by so many other companies in the ‘90s. From then on, it has been a decade and trend has been proven out to be growing every year.

The idea behind Outsourcing was that companies could grow their profits and scale up their ventures if they hired other companies, as that brought about many benefits with itself. The Deloitte’s 2016 Global Outsourcing Survey states the most common reasons for companies to outsource:-

  • 59% – Reduce or control costs.
  • 57% – Focus on core functions.
  • 47% – Solve capacity issues.
  • 31% – Improve service.
  • 28% – To gain access to expert talent and knowledge.
  • 17% – Manage the business environment.
  • 17% – Accelerate organizational transformation.

The statistics stated above, and many other careful assessments like these have suggested that companies will continue to use Outsourcing as a practice, and the industry is only expected to rise because of the following reasons:-


Cost Savings Aren’t Going Anywhere

The primary reason for outsourcing was to save money. Companies were actually able to reduce their overall expenditure by having to pay less than half the usual amount in salaries to their offshore outsourcing partners. Statistics from Statista suggest that the estimated global market size for outsourcing in 2018 is at $75.1 billion, which is expected to rise to $82.6 billion by 2020.

More Focus On Core Activities

Had these companies have hired an in-house staff, their focus would have shifted from major operations to managing the employees. According to the article on Computer Economics, Following are the 10 most popular IT functions being outsourced:-
-Application development.
-Application maintenance.
-Data Center operations.
-Database administration.
-Desktop support.
-Disaster recovery.
-Help desk.
-IT security.
-Network operations.
-Web hosting and operations.

Standardized Solutions Preferred Over Customized Solutions

As the economic crisis of recent years hit the companies really hard, it is expected to become imperative for them to go for standardized solutions as they would cost way lesser than customized solutions. Which is another reason why many U.S. and Europe based companies rely on Indian outsourcing agencies as well. You may want to check out the blog on reasons why India is preferred for outsourcing.

Convergence of Outsourcing and Cloudsourcing

Cloudsourcing is a process by which cloud products and services are outsourced to and provided by one or more cloud service providers. Industry experts predict that this merger will provide better opportunities for the entire outsourcing industry. Businesses are pushing towards cloud solutions for more flexibility, and scalability.

Bottom line is that globalization, having pulled the barriers down between various nations, has made the business environment more dynamic, which means that the challenges faced by the existing companies just got harder to face. These companies cannot afford to focus on all the operations on their own as they would otherwise risk the ability to catch on with the competitors. You may as well outsource your operation if you’re someone who’s looking for a rapid expansion of your venture.

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