The New Digital Services Ecosystem: A Revolution driven by the Convergence of IT, BPO and Digitally-fueled Outsourcing

Picture1The 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.

The advent of RPA, Cloud, IoT and advanced analytics is changing the nature of how the work gets done. These technologies combined with new players and new business models  are driving the reincarnation of outsourcing! New digitally-fueled service offerings are ushering in a wave of heretofore unachievable benefits and it couldn’t have come at a better time. Many enterprises still prefer the bulk of the work, the investment and the risk to be borne by an outsourced service provider.  These customers simply want the results. With the implementation of digital transformation services, clients are beginning to realize that they can now have outcome driven engagements with providers that can drive real innovation without the cost, risk and time investment.

“Many analysts have enjoyed predicting the demise of outsourcing several times over the past decade. And they continue to be wrong.  Outsourcing is alive and well, but being revived through Digitally fueled services,” said Frank Casale Founder of The Outsourcing Institute & The Institute for Robotic Process Automation & Artificial Intelligence.  “That said, the nature of outsourcing is indeed changing; while the old outsourcing models are in fact dead, a new digital services industry is being born. When I launched the Outsourcing Institute in 1993, outsourcing was all about labor arbitrage and mostly your mess for less; it has pretty much remained the same for the past two decades. But this original iteration of outsourcing began to run out of steam over the past decade.   Customers wanted innovation, but weren’t getting it from their traditional outsourcing contracts.  Along come digitally fueled services powered by new technology, new business models, new pricing and less labor arbitrage. This is the New Outsourcing.”

“Digital enterprise transformation is the primary focus of The Outsourcing Institute’s 2017 programs because this is truly where the industry is headed, and needs to move to very quickly. While there are plenty of members who are still in the thralls of traditional offshoring and outsourcing deals, it is clear that those models are no-longer sustainable based on accelerating technology and business convergence, market dynamics and potentially political pressure,” says Daniel Goodstein, President of The Outsourcing Institute. It’s imperative that the marketplace and our members begin to shift to the ‘New Outsourcing’, leverage digitally-fueled services and re-think the way they are operating and getting work done. We plan to focus a significant portion of our content, events and advice around examining the impact of digital technologies on the marketplace in the coming years.”

To this end, The Outsourcing Institute’s Digital Convergence Conference will be held in New York City on September 27, 2017, sponsored by PwC, and co-chaired by Anupam Govil, Partner at Avasant and Gregory North, a former Chief Process Officer at Xerox and Principal of Outsourcing Institute’s newly formed Digital Transformation & Innovation Practice. The conference is designed to help clients, service providers and advisors make the transition to Digital Services, providing insight into the new ways work is getting done through the convergence of IT, Business process/operations outsourcing and Digital technologies. The conference will include discussions around new go-to-market strategies; digital revenue models; new methods of handling governance, risk and compliance; customer experience management and combining front, middle and back office/internal operations.

Come discover the “uberization of the enterprise” through IT as a service, Business process as a service, Crowdsourcing, Automation & Cognitive, IoT, Analytics, Cloud and platform-fueled technologies. If you haven’t already registered, go to http://oievents.com/digital-convergence-conference-2017/ to lock in your attendance! or more information on the full Outsourcing Institute event calendar, visit clear-barnacle.10web.cloud/events.

Outsourcing Institute President Daniel Goodstein,  Anupam Govil, Partner at Avasant and Gregory North, a former Chief Process Officer at Xerox and Principal of Outsourcing Institute’s newly formed Digital Transformation & Innovation Practice, contributed to this article.