Outsourcing Redefined and Refined in 2021 post COVID-19

The COVID-19 pandemic has put immense pressure on companies in every sector to go digital. Those that were already digital needed to ramp up efforts even more, and those that hadn’t yet taken the digital path were forced to do so rapidly. What many organizations realized was that regardless of the size of the technical talent internally, more was needed to meet the growing demands of consumers who had no other option than to live life (in their business and personal lives) as digitally as possible.

Outsourcing has taken on many definitions over the years, but as COVID-19 has shifted the technology landscape, outsourcing now has an expanded definition and scope. Outsourcing (including near-shoring, right-shoring, etc.) means seeking external support for auxiliary services or IT functionality to free up main IT units to work on core business functions. Whether it’s employing the help of a local tech startup or looking abroad for massive-scale support, outsourcing allows businesses to concentrate on innovation as opposed to mundane activities which are offloaded to vendors. Let’s take a closer look at how COVID-19 has changed outsourcing from the business and consumer perspective.

Business Impact

Whether a business was new to digital or not, the impact of COVID-19 saw a significant increase in demand for delivery services in the IT sector. Brick and mortar businesses with little or no digital footprint accelerated their efforts to digitization to support customer needs and demand. Companies with existing digital products and services rapidly increased their online offering and presence.

IT organizations suddenly had to support unprecedented increases in features pipelines and new projects. Many businesses realized it was nearly impossible to meet the uptick of requests with internal talent alone. Although internal IT teams worked more hours, delivery often fell short of demand. To sustain this increase, it became more common to enlist the help of external vendors. Outsourced Scrum teams executing in an Agile manner help increase productivity and output by alleviating these pain points and pipeline challenges through greater capacity and scalability potential.

Consumer Impact

COVID-19 also drove consumers to rely heavily on e-commerce to fulfil their ongoing (often daily) needs. As demand suddenly grew,  traditional e-commerce companies struggled with the amount of incoming requests. Further, e-commerce sites had to innovate to deploy a wider variety of products and services in order to remain competitive. They needed to quickly find a way to sustain the increase in both traffic and demand driven by consumers. Companies had to implement changes that were both qualitative (i.e. acquiring talent with new skill sets to support technologies and solutions that were not previously part of the footprint or requiring resources with higher qualifications and greater experience in order to deliver more complex solutions) and quantitative (i.e. aggressive staff growth).

Consumer demand also puts pressure on IT vendors across the entire industry, including the well-established cloud-based providers like Amazon Web Services, Google Cloud Platform and Microsoft Azure. Even remote computing organizations (VOIP, network, WiFi, remote software, VPN, broadband providers, etc.) needed to scale up to meet demand.

The challenge for all of the organizations in this space was that the increase wasn’t organic or incremental – but rather a substantial jump. E-commerce businesses, IT providers and remote computing organizations needed to quickly find a way to acquire new talent to support their struggling teams. As a result, outsourcing organizations saw a significant increase in demand to help organizations across the IT spectrum meet new and sudden demands for scale and output. 

Outsourcing Trends in 2021 and Beyond

As the pandemic eventually fades, will these trends in outsourcing continue? The short answer is yes. The pandemic put pressure on businesses to go digital, and there is no indication that these initiatives will slow down. The past year accelerated digital transformation trends in industries like retail, e-commerce, healthcare, financial services, etc. If anything, efforts will be expedited further as companies that have relied on brick and mortar are losing money. Compensation for IT pros has grown which means the demand that drives it has grown as well.

Another trend that will continue is the shift in regions of desired outsourced tech talent. With the large jump in requests from IT service providers, they’ve looked increasingly to Eastern European locations for technical support. Why? Not only is the region a hotbed for talent (and continues to grow), but its time zone tends to be more favorable than working with organizations in APAC. Especially since the pandemic created an immediate need for massive-scale digital transformation initiatives, having outsourced talent in Eastern Europe means work can be accomplished more quickly and collaboratively — and actually almost gives organizations a 24 x 7 sales, service and support infrastructure to not only satisfy current customers but increase their ability to attract new clients. Looking ahead, regions like Central and South America will likely see a boost in outsourcing, again due to their proximity to the time zones in North America and Western Europe.

COVID-19 drove a broad demand increase for digital products and services. Stay-at-home orders and work-from-home mandates changed consumer behavior almost overnight. Businesses needed to adapt quickly or face peril. Outsourcing IT skills to meet these shifts was necessary to keep pace with the competition and innovate for whatever the future may bring. IT pros that have yet to consider outsourcing as a viable tool should look into how this increasingly adopted option may be able to add efficiency and innovation to their organization.

Article contributed by Oleg Boyko, CTO of Exadel