Who says Offshoring has no future?

March 31, 2016 11:18 am | Updated 6 months ago.

By Arup Gupta

The Offshore Outsourcing Industry, having been in place for over three decades is now going through a phase in which it is reinventing itself for the next phase of growth. Therefore, for the skeptics to say that Offshoring has no future is a bit far fetched, to say the least.

In the early days of offshoring, the primary attraction was to reduce the cost of IT by leveraging the labor arbitrage. This perception of offshoring providing just low-cost labor, however, changed rapidly as the customers began to see the benefits from quality certifications and talent pool of the offshore vendors. This further accelerated the pace of offshoring and even encouraged MNCs to set up their own offshore centers for both IT and ITeS. Some MNCs have even set up their Innovation Centers and R&D laboratories in offshore locations.

Having reached this peak, the offshore vendors will now need to adapt to the changing world of “Digital Age” where new technologies are rapidly changing the way technology can be used to develop and deploy commercial applications and, more importantly, the way technology services need to be delivered.

The major items that are driving this change are:

  1. Application deployment on the Cloud: Today the commercial applications for most enterprises are no longer hosted on mainframes in large data Centers. An increasing number of enterprises are now deploying their applications on the cloud to enable seamless integration with other applications and also to enable the users across different locations to access the application using web-services.
  2. Mobility: Most applications today need to be mobile enabled, to allow users to access the application from anywhere.
  3. Analytics: In today’ environment, it is necessary for all applications to have fully integrated and sophisticated analytics. In fact, most applications today have gone beyond providing just descriptive or predictive analytics and are trying to provide prescriptive analytics that tells the enterprise what steps it needs to take to manage future risks or to take advantage of future opportunities.

In summary, the innovations in technology in today’s Digital Age, not only enables faster application deployment closer to the user but also provides a lot of insight based on trends and usage of sophisticated algorithms.

In this scenario, therefore, there are a number of groups that believe that offshore outsourcing is no longer the future citing the following reasons;

  1. Speed of response is slow
  2. Customers are getting more mobile oriented.
  3. Customers want to be close to the technology and, therefore, prefer geographic proximity to the solution providers.

While the concerns cited above are genuine, the Enterprises do need access to large pool of talent, that are well versed in the application of these Digital Technologies to develop commercial strength applications meeting the needs of the enterprise customers. Such large pools of expertise are available with the offshore vendors. In reality, therefore, the Offshore Outsourcing processes and methodologies are evolving to address the above needs of the customers by using Agile Development methodology to be highly responsive to the customers, by providing strong program management expertise on site close to the customer, so that the customer does not feel geographic separation of the remote development locations and so on.

One of the notable outcome from these shifts in customer expectations is an aggregator model, where the aggregator provides a fully ready made platform for outsourcing to address the above customer needs, complete with highly competent onsite program management, Offshore program management to ensure flawless delivery and a network of best-of-breed offshore delivery partners with depth and breadth of domain, solution and technology skills to provide both the required capacity and the required capabilities. D2E Consulting ( www.d2einc.us ) in partnership with Affinity (www.affinityit.com) and a network of highly capable offshore delivery partners, provides such a ready made outsourcing platform.