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The nature of traditional outsourcing

An article I recently wrote for the Future of Sourcing addressed the key trends driving a new generation of IT outsourcing. The IT industry has changed dramatically and in order for traditional outsourcing to succeed it must follow suit.

Perhaps what stands out the most when its comes to the transformation of traditional outsourcing is the relationship between the service provider and buyer. Today’s service buyer is not looking only for arms and legs. In most cases, they’re looking for true partners who can bring more to the table in terms of expertise and how it can bear on very specific business problems.

As I illustrated in the article, following are some very real ways in which the nature of traditional outsourcing has changed and will continue to change:

  • The switch to a provider ecosystem. A key change is that a company can no longer outsource IT projects in a vacuum. Today businesses require a whole team of providers, who can work in partnership with each other to bring key capabilities to the project. This is vastly different from the past, when companies turned to big consulting firms or ERP systems to deliver the capabilities that they needed in a one-stop-shop.
  • The need for Industry-specific expertise. It’s not enough for today’s outsourcer to be a technology expert, it must also be an expert in specific market sectors, such as retail or banking. This is particularly critical in AI development, where knowledge of specific business problems is paramount. In this area, it’s is essential for an outsourcer to have a firm grasp of key issues to ask the right questions, gather the relevant data and develop an effective algorithm.
  • Growing compliance demands. With the complexity of advanced AI and other IT solutions, as well as the need to protect sensitive customer data, ensuring compliance to federal, industry-specific and corporate rules and regulations is critical. Today’s outsourcers need to be proficient in these requirements and be able to easily demonstrate compliance, and help companies establish the processes, protocols and software they need to achieve compliance with their industry regulations.

Driven by increasing complexity, advanced AI innovation and a growing understanding that business drives IT demands, outsourcing IT is not what it was just a few short years ago – but it’s even better. The future holds great promise for outsourcing IT and many companies understand that it simply makes good business sense.

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