Domestic Outsourcing – Transforming the Marketplace
Ask CIOs what comes to mind when they hear the terms “outsourcing” or “customer support,” and they will almost always begin talking about the large firms in India or Southeast Asia. The reason is simple. During the past few decades, companies in those regions have taken advantage of emerging networking technologies to offer low cost IT support services to major companies worldwide.
But there was a cost. Companies lost the personal and specialized support that came from having a local IT resource. The voice on the phone or the technician on the other end of that email understood basic IT needs, but they most likely didn’t understand the company’s business. So, while they could help troubleshoot a bad mobile connection, they couldn’t offer advice and support based on how employees are actually using that connection. In other words, they knew technology, but not necessarily the business nuances associated with IT support for a hospital administrator or large sales force.
In 2015, we experienced a shift. Domestic outsourcing in the United States saw rapid growth, with many companies transitioning to smaller, more regional IT resources offering more diverse, personalized services. An analogy can be made to the ERP software market, where behemoth providers lost and continue to lose market share to cloud-based, easily customized solutions such as Salesforce.com. Similarly the giant IT outsourcing firms are not built to offer the same level of service as smaller, more nimble providers that can spend the time to fully understand their customers’ businesses.
Rethinking Your IT Strategy
So, how does this apply to you and your business?
In 2016, we see these growth trends not only continuing, but changing the very way the industry works. The emphasis on more customizable solutions and providers means rethinking your current IT support strategy and the value it offers. Many Fortune 1000 companies are already taking these steps. For instance, GE launched a new ad campaign focused on the importance of in-house IT skills. And many others are following suit, looking for “fitted” or more customized technology tools and solutions that provide a competitive advantage.
With that in mind, it is obvious that the offshore companies are at a competitive disadvantage against the domestic firms when competing on a new playing field that rewards agility, nimbleness and a deep understanding of the business needs.
Rethinking Who You Hire
So, does it make sense to simply build an in-house support team that will obviously gain an intimate knowledge of your business?
While that may be viable for some, it just isn’t financially practical for most companies. The demand for qualified IT talent is at an all-time high. Without successful track records and connections with the right undergraduate programs, competition for the right software engineers with the right skill set is especially fierce. In addition, the idea of working for a non-tech-focused company isn’t particularly appealing to talented prospects looking for a job. Domestic outsourcing firms, on the other hand, offer them more potential for job growth and diverse experiences – as well as greater flexibility in terms of location and living conditions.
A recent study by CareerBuilder showed that 73 percent of software development jobs went unfilled in major metropolitan areas. This supply/demand gap is due to an ever increasing demand for technology skills that have made their way into every product and service that we consume. Continuing to look into the same over-fished pools for talent will not close this skills gap. Instead, the new business model in the industry is to simply leverage previously untapped or underutilized talent in second-tier cities such as Mobile, Alabama or Albuquerque, New Mexico. This approach provides scalable, talented resources in lower cost of living locations that are “sticky” due to the desirability to live in these high quality of life locations.
Companies who do not want to be left behind will have to develop new and creative solutions to close this skills gap. Domestic outsourcing offers a solution that is both good for the companies that participate and for the US economy as a whole. Simply put: it means better business.