Outsourcing has become an integral part of how modern companies operate, enabling them to reduce costs and access specialized expertise. As we move into 2024, certain outsourcing trends are expected to shape business practices in the coming year.
Rise of SMB Outsourcing
Traditionally, outsourcing was dominated by large enterprises partnering with equally sizable providers. However, small and medium businesses (SMBs) are now the fastest-growing segment adopting outsourcing and managed services. SMBs have realized outsourcing can provide the technology capabilities and operational bandwidth needed to enable growth without inflating headcount and infrastructure costs. From IT management to customer support, SMB outsourcing will skyrocket.
Focus on Core Competencies
Companies are analyzing operations to isolate core competencies vs. non-vital tasks. Activities directly serving the business’s niche value proposition are handled in-house while supplementary services are being outsourced. App development firms, for instance, are outsourcing hardware maintenance so engineers can focus on coding. Enterprises are shaping more clearly defined boundaries between insourced and outsourced responsibilities.
IT Outsourcing Spans the Tech Stack
Whereas outsourcing previously concentrated on basic apps and infrastructure, engagements are expanding higher up the technology stack. With digital transformation pressures, companies lack specialized staff to implement emerging technologies quickly. Partners are being engaged earlier to collaborate on cloud architecture, data analytics, AI system design and training, robotic process automation, and more complex use cases.
Co-Sourcing and Multi-Sourcing Gain Traction
Plain offloading tasks to vendors is maturing toward more collaborative “co-sourcing” models. Companies rely on partners as force multipliers intersecting business and technical expertise to compete in disruptive markets. Engaging multiple specialty providers to supply discrete services – aka multi-sourcing – is also rising over reliance on single vendors. The interplay generates flexibility while scrutinizing spend more effectively.
Quality and Data Security Take Priority
As data breaches run rampant, ensuring outsourcing providers implement stringent security controls and compliance practices has become paramount during vendor selection. In addition to cybersecurity preparedness, companies are also mandating governance practices to ensure service consistency, visibility, and continuous optimization – especially for customer-impacting operations. Master service agreements locking output quality targets are prevailing.
Regional Delivery Location Decentralizes
Rising costs of delivering outsourced services from offshore staples like India and China have spurred providers to disperse delivery from nearshore locations including Eastern Europe and South America along with second-tier India cities offering talent and infrastructure cost advantages. Decentralizing delivery introduces redundancy while supporting regional expansion and localized outsourcing regulations.
Outcome-Based Pricing Models Thrive
Transactional approaches to outsourcing focused on efficacy metrics like hours billed or tickets closed. But “as-a-service” models directly tying vendor invoices to business impact through performance metrics are overtaking outdated approaches. Outcome-based pricing models – whether directly usage-based or indirectly through service credits – better align provider success with clients’ operational and financial objectives.
2022 destabilized global operating conditions and economies alike while outsourcing demonstrated its countercyclical resilience. As companies compete in turbulent conditions, tapping outsourcing to concentrate on market differentiators enables success. The trends projected direct outsourcing toward more collaborative, specialized, dispersed and business-embedded positioning to fuel growth visions. Adoption expanding deeper across sectors and solution domains will cement outsourcing as a formidable corporate strategy moving ahead.
