Outsourcing is becoming the new normal, and it is reshaping the whole global industry. As organisations become more reliant on technology, so do their needs for partnerships with outsourcing providers. Digital and data revolution, automation and personalisation along with many other worldwide transformations are shaking the way business operates: both the kinds of services and the quality. Gibraltar-based companies are already heavily reliant on outsourcing various aspects of their business, given the very limited talent pool available locally.
Historically, outsourcing has had many strongly negative associations. Most of the companies were not willing to publicly reveal they do outsource their operations. However, nowadays and in the upcoming years, it will become the only way for further growth of business with no other channel giving the same economic efficiency. Thus, outsourcing providers will go out of the shadow and become strategic partners with strong trustable relationships. The outsourcing industry will become more collaborative and yet competitive. In particular, clients will look for outsourcing vendors who provide customer-centricity and are progressing with new technologies. Not only will the companies be willing to cut costs, but to get a people and value-driven partner.
SHORTAGE AND URGE FOR LEADING-EDGE IT SKILLS
With the extensive rise in technologies, companies are under pressure to remain competitive. From cybersecurity and Artificial Intelligence to blockchain and cryptocurrencies, the insurgency of new technologies is overwhelming. Thus, companies are seeking cutting-edge skill sets to outsource effectively. The lack of in-house IT engineering talent will become one of the core reasons to outsource. Indeed, assistance with digital transformation is becoming the most sought-after outsourcing skill in the next 12 months, required by nearly 80% of respondents as shown by the following chart:
% of Respondents
In the upcoming years, countries of Eastern Europe will stand up strong competition for India and China for IT outsourcing. So far, the largest share of global outsourcing revenue was generated in the EMEA (Europe, Middle East, and Africa) region, with India and China taking leading positions. This is soon to be changed as Poland, Ukraine, Romania, and Belarus are becoming the new hotspots. Ukraine in particular has become a fertile soil for setting up an offshore development team with a large pool of talented IT professionals.
It is reshaping the whole global industry.
OUTSOURCING OF FINANCIAL FUNCTIONS ON THE RISE AS REGULATION TIGHTENS
The demand for finance and accounting outsourcing services continues to grow as CFOs of most companies are looking at reducing costs drastically. Traditionally, companies tended to outsource basic functions like accounts preparation, bookkeeping and payroll. Nowadays, more and more organisations are taking the outsourcing route to meet complex functions such as financial analysis and planning, financial closure, and regulatory reporting, particularly in response to greater regulatory burden becoming a major time-consuming source for organisations’ finance teams. At Benefit Business Solutions Limited, we have witnessed and experienced this change first-hand, through the work we do with our financial services clients, which are increasingly demanding our financial outsourcing services, particularly in relation to regulatory reporting and financial planning services as new regulatory requirements have been introduced.
There is little doubt that cost savings will still remain one of the key advantages of outsourcing. However, trends suggest it won’t be the sole deciding factor when selecting a service provider. Decision makers will be concentrating a lot more of the overall value that is provided instead of just reducing costs. With ever-increasing technological sophistication across all markets, the domain of outsourcing will expand into new service areas, creating new market opportunities for both the customers and service providers. Furthermore, for customers where information and data constitute the primary economic asset, new service opportunities will emerge for industry players who are well positioned to either gather context-specific data and/or process it.
It will become the only way for further growth of business.
Similarly important, the emergence of the experience economy – where the primary economic value resides in experiences and other immaterial attributes – is creating new pathways for service innovation and market opportunities. Customers will increasingly demand outsourcing services that regard design, aesthetics, culture, storytelling, values and experiences, which are more immaterial in nature. This will entail maintaining a greater focus on service design and the user experience for existing offerings – this type of client-centric approach, with particular emphasis on the emotional journey, will be essential.