The New Digital Services Ecosystem: A Revolution driven by the Convergence of IT, BPO and Digitally-fueled Outsourcing
The outsourcing journey began 23 years ago, when it was all about labor arbitrage and the focus was on cost and offshore labor– but if you think outsourcing is dead, you’re wrong – it’s just been reinvented; the outsourcing revenue decline over the past 7 years since the peak of 2014 shows no signs of turning around anytime soon, but at the same time, we see a dramatic and rapid increase in the market for digitally-fueled deals–service offerings powered by new technology, new business models, new pricing, automation driven labor arbitrage, more cloud, and more service as software.
At a key inflection point, enterprises are seeing the convergence of emerging technologies with business operations & digital transformation for a new type of outsourcing, as they re-think their business processes, organizational structure and sourcing, pricing & revenue models to adopt to a new Digital world. Never before have there been such opportunities for those seeking better, faster, and lower-cost services. If you are like most business and tech executives, you are probably dissatisfied, if not fed-up with traditional outsourcing and its labor arbitrage-centric business model. Most of the savings have evaporated, performance is lagging, and the innovation isn’t coming fast enough. Read More Here
Special Interest Groups
IT Outsourcing is the use of external service providers to deliver IT services, such as application development & maintenance, as well as infrastructure solutions for businesses not generally in the tech business, allowing the customer organization to focus on their main business or cut costs and maintain their position in the marketplace. This can also include software-as-a-service (SaaS), Cloud & Mobile solutions, as well as cyber-security and other related IT managed services.
Business Process Outsourcing
Business Process Outsourcing (BPO) is the contracting of a specific business operation or process, such as customer service, finance & accounting, HR, recruiting, payroll or any other non-IT business function, to a third-party service provider, typically for a non-core competency to a provider with more specialized expertise, allowing the customer organization to focus on their main business or cut costs and maintain their position in the marketplace. BPO is often divided into two categories: back office outsourcing which includes internal business functions such as billing or purchasing, and front office outsourcing which includes customer-related services such as marketing or tech support.
The convergence of software, services and digital channels is resulting in a paradigm shift within the Services industry. Traditional services firms are transforming to help their customers through the Digital journey. Organizations are increasingly relying on Service providers as partners to help them transform into a Digital enterprise. By combining the power of Digital Services such as analytics, mobility, IoT, automation and cloud, organizations can enhance customer engagement, improve performance and drive new growth opportunities in a Digital world.
Just as industrial automation (robots) have revolutionized how work gets done across the manufacturing industry we are now seeing another automation revolution happening where any organization that uses labor on a large scale for general knowledge process work, where people are performing repetitive, high-volume, highly transactional process functions. The recent advances in robotic process automation (RPA), cognitive computing and artificial intelligence (AI) will fundamentally change how work gets done! Virtualized FTE's or digital labor is revolutionizing the way we think about and administer business processes, IT support processes, workflow processes, remote infrastructure and back-office work. The result will deliver significant cost savings as well as provide dramatic improvements in accuracy, reduced cycle times and increased productivity in transaction processing while it elevates the nature of work by removing people from dull, repetitive tasks. Outsourcing as we know it will be forever changed, large enterprises are rethinking how work gets done, and every industry will be impacted.
Cloud computing is an Internet-based model providing on-demand access to infrastructure and computing resources, typically visa a utility-based model via shared processing resources, data storage and other devices on demand. Current Cloud topics include cyber-security, mobile applications, the true cost & ROI of Cloud, Migration & moving from Legacy to Digital Systems.
Internet of Things (IoT)
Along with RPA, BPaaS, and Analytics & AI, the Internet of Things (IoT) is one of the key digital phenomena currently changing the face of outsourcing. NelsonHall estimates the global market for IoT services at $1.2bn, and this is expected to grow to $9.5bn by 2020, making it the fast-growing of the ‘digital transformation’ market segments (51% CAAGR). Here, we will be looking at the key IoT themes, and at the areas where IoT outsourcing opportunities are fast emerging.
2016 will be the year that companies go beyond the hype, get to reality and actually invest in digital innovations that produce results and deliver ROI. It is the year that providers will go from selling buzz-ware to offering real industry-driven solutions. Digital value chains will become a reality and organizations will reap the true power of data and insights. But along with new opportunities, there are increased risk of cyber-security hacks, data privacy breaches and regulatory issues. Financial services and insurance companies have to balance their strategic priorities with the risks, regulatory and cost objectives. The advent of Digital banking and mobile payment systems coupled with consumerization of IT, automation and real-time analytics is changing how CXOs procure and implement new solutions.
Business Process as a Service (BPaaS) is the delivery of business process outsourcing (BPO) services via the cloud, typically leveraging a utility-based, on-demand or consumption-based pricing model, and is accessible as a cloud, web-based service, not requiring the client to own or manage its own infrastructure.
Vendor management and governance is emerging as a top business priority. Organizations are recognizing that effective oversight of service delivery is essential to managing multi-vendor service delivery models, to achieving anticipated value and benefits from outsourcing and to complying with increasingly stringent regulatory compliance requirements. In structuring their vendor management functions, businesses are focused on enabling consistent and standard oversight of each provider, as well as transparency and visibility into the entire chain of service delivery. Increasingly, businesses are outsourcing the day-to-day administrative tasks of vendor management to a third-party provider, and finding that this approach yields significant cost and performance benefits.