Outsourcing – take three. As the cloud gains popularity alongside offshoring and domestic outsourcing, IT managers are suddenly faced with more choices. That’s what Shane O’Neill addresses in a timely post to InformationWeek.
Cloud vs. Traditional
The cloud (which is technically a form of outsourcing) threatens the traditional outsourcing model as it gains momentum among Fortune 500 companies. O’Neill explains this trend:
Big companies that once feared using public cloud because of data security concerns are gaining confidence to use it for development and testing, and even for running customer-facing apps,
Retailers in particular have latched onto the practice of using cloud applications despite the many clear security issues that go unaddressed. As a result of this unfolding acceptance by major companies, an increased and broad-ranging use of cloud-based services is expected.
Outsourcing Pricing Models
To compare the value of outsourcing pricing models, O’Neill believes it is necessary to look beyond staffing changes or help desk ticketing. Forrester research interviewed one service provider that used a form of outcome-based contracting. The provider was rewarded handsomely for achieving 100% of its client’s target under deadline. As a pricing model, this outcome-based approach may gain popularity since it helps to align client goals with those of providers.
By leveraging remote data management and data center technology, India is positioned to price competitively against the likes of Hewlett-Packard, adding this approach to a list of strengths that include cheaper and younger skilled workers, and a larger population pool.
Domestic sourcing is becoming more favorable for companies interested in avoiding the complications of offshoring. Such complications include cultural barriers and political unrest. Additionally, businesses that choose offshoring must manage large pools of untried talent, whereas the higher labor costs of domestic sourcing are offset by the need for relatively smaller teams.
Read the entire article at: http://www.informationweek.com/strategic-cio/enterprise-agility/4-it-outsourcing-trends-to-watch/a/d-id/1297736