Companies want more from offshore IT, likely leading to more on-shore IT growth

The most recent offshoring survey from Horses for Sources suggests that companies will have less use for traditional IT outsourcing.

When it comes to IT services and BPO, it’s no longer about “location, location, location”, it’s now all about “skills, skills, skills”.

Instead of “commodity” capabilities (things like password resets, routine programming changes, etc.), companies want more highly-skilled, innovative capabilities. Either offshorers need to provide this, or companies will in-source those skills.

Because offshorers typically don’t focus on such “open ended” roles, analysis of the survey suggests offshorers will have less business, at least new business:

aspirations for offshore use between the 2014 and 2017 State of the Industry studies, we see a significant drop, right across the board, with plans to offshore services.

And:

an increasing majority of customers of traditional shared services and outsourcing feel they have wrung most of the juice offshore has to offer from their existing operations, and aren’t looking to increase offshore investments.

What with the large volume of IT offshorers companies do, and how this outsourcing tends to control/limit IT capabilities, paying attention to these trends can help you predict what the ongoing “nature of IT” is in large offshorers.

This fits the offshoring and outsourcing complaining I hear from most all software teams in large organizations.

To me this read as “yes, we need to refocus IT to help us create and refine new business models.” You know, “digital transformation,” “cloud native,” and all that.

Source: “Offshore has become Walmartas Outsourcing becomes more like Amazon”

Prediction: “sub 10% growth” in 2017 at Indian IT services companies, Gartner

“[Gartner analyst Arup Roy] said Indian [IT services] companies, for example, should not expect double-digit sales revenue growth in 2017, adding that ‘a sub 10% growth for 2017 is certain.'”

But, the effect is likely to be on all large organizations who have been globalizing IT staffing:

“There is really no such thing as the Indian IT services sector. All companies would be affected. For example, Capgemini employs more people in India that in any other country. Legislation does not differentiate between Infosys, Capgemini or Accenture,” said Schumacher.

And:

In 2013, German car manufacturer Daimler said it planned to achieve savings of €150m a year by bringing IT services in-house and expanding IT operations in India and Turkey. In 2012, General Motors said it would insource around 90% of its heavily outsourced IT operations.

We talked about more “Trump’s possible effects on tech” in last week’s Software Defined Talk, with some extensive links and notes in the show notes if you don’t want to fill your ear-holes.

Source: Trump election win creates uncertain future for IT services sector

Keeping developer skills fresh

My co-worker Richard wrote up a laundry list of tactics to cultivate and maintain developer skills. It’s drawn from the tactics we’re seeing organizations put in place and a recent survey from the Cloud Foundry Foundation.

Internal events

While I used to scoff at internal brown bags and workshops, I’ve seen those be highly effective in organizations looking to buff up at their developer skills. It both transmits actually new information and shows developers that the company actually cares. Upping morale and skills is hard to beat.

Pairing

Also, it looks like the continual cross-training you get from pair programming is effective. Staff keeps up to date from the micro level of new keyboard short cuts to the big picture stuff like architectural patterns and domain knowledge. Plus, they learn and practice working together and trusting each other.

More survey findings

The developer survey that Richard kicks off with has some more interesting answers. Here’s some details from the survey:


– “By a nearly 2:1 margin, they are choosing training over hiring or outsourcing as the preferred method for addressing a shortage of skills in their own companies.”
– “We suspect that the companies further along in their cloud journey are doing more interesting things and are more risk tolerant; developers find those jobs more attractive. However, those companies that still primarily rely on legacy architectures, don’t push the envelope or are only very sluggishly making efforts toward digital transformation, struggle to hire and retain people that have the skills necessary.”
– “the majority of companies (62%) express confidence in the abilities of their developers to “keep current” with their IT knowledge and skills. At an individual level, however, only 47% of developers express confidence in their own ability to keep current.”
– “By a large percentage (60%), companies say they first adopt a technology—then upskill, train, or hire as necessary. This is preferred to selecting a new technology based on the skills already available in the company (40%).”
– “By and large, companies are addressing the shortage of skills by training or upskilling existing people rather than outsourcing (61% versus 39%) or hiring (62% versus 38%). They are making use of a variety of training methods from formal internal trainings, vendor-led trainings to informal trainings like ‘lunch-and-learns.'”
– It was done in 2016Q3, over 845 respondents in an online survey. “The survey divided respondents into four broad IT ‘roles’: Developer 30%, Operations 30%, Manager 20%, and Line of business leadership 20%.” And spread across geographies and industries.

Lesson learned from India: Four common traits of a profound digital transformation

Agatha over at 451 visits Indian outsources, commenting on how they’re changing to do more cloud related work:

Aside from spending a great deal of effort on building a market-driven culture, the company has instituted a fundamental shift in workforce mindset by moving away from doing what they are told and on to identifying new opportunities to add value and delight customers.

Also:

Aside from spending a great deal of effort on building a market-driven culture, the company has instituted a fundamental shift in workforce mindset by moving away from doing what they are told and on to identifying new opportunities to add value and delight customers.

And:

Wipro reported that public cloud partners serve as a key building block of its hybrid cloud migration strategy. For public cloud deployments, it has teamed up with AWS, Microsoft Azure, SoftLayer, Oracle and vCloud Air to provide managed public cloud offerings. Meanwhile, public cloud partners increasingly represent an important sales and marketing channel for HCL Technologies, with a number of deals having significant public cloud roadmaps. There are a few providers that focus on building vendor-specific expertise and credibility, such as Infosys, which is the premier consulting partner for AWS, and CMI industry advisory group. CMI at TCS claims to have more than 120 certified AWS architects and over 800 trained associates.

Source: Lesson learned from India: Four common traits of a profound digital transformation

The answer’s simple – most providers are tooled up to deliver what was contracted, not what the client really needs. Most large outsourcing deals today were (and many still are) initially negotiated and brokered by different teams, on both the provider and buyer sides, than the teams which ended up running the engagements. Too many enterprise outsourcing relationships, today, were (and many still are) brokered to solve yesterday’s challenges – namely, driving out labor costs, mitigating risks, and achieving a basic level of operational performance.

How many times have you heard the cry “we were promised innovation, better analytics and all these wonderful new capabilities, but haven’t seen anything“? Well, that’s because they didn’t actually buy those things…