Five large technology trends in the outsourcing industry

27 December 2017 4 min. read

The technology outsourcing industry is booming. The appetite to leverage innovative technologies and automation to slash inefficiencies, or develop better solutions for businesses and consumers, stands at the highest point in years, according to data from global outsourcing advisor Information Services Group (ISG). The next 12 months are forecast to remain an exciting time for the industry – Steven Hall,Partner & President EMEA at Information Services Group (ISG), reflects on five key trends that will shape the market in 2018.

Robotics will surge

The adoption of automation, machine learning, robotics process automation and cognitive technologies will continue to reshape enterprise strategy and workplaces, with an increasing number of tried-and-tested success stories finally persuading slow-adopters. Indeed, early-adopters are now looking to the next iteration of these technologies, so the race is on for service providers to deliver the goods.

Digital will dominate

While Europe has been more cautious than the Americas and Asia Pacific, the widespread adoption of digital services is becoming apparent. We can see this in the booming As-a-service market, which continues to grow steadily across Europe and is catching up fast with traditional sourcing. ISG’s latest Index showed the value of As-a-service contracts to be up by half (up 48%) year-on-year, with the market showing no sign of slowing down.

The desire for agility is accelerating the adoption of IT infrastructure and software that’s as flexible as the workforce using it – just one example of the way in which technology is helping to boost productivity. The uncertainty surrounding Brexit provides the perfect environment for As-a-service to flourish, as digital and cloud solutions provide organisations with the flexibility to ramp up/down their spend and usage of services more easily than traditional services. 

Five large technology trends in the outsourcing industry

Compliance headaches will impact investment

In an increasingly regulated global environment, and with the introduction of the General Data Protection Regulation (GDPR), investment will likely take a hit. More regulations will prompt businesses to dedicate greater attention and funding to navigating the increasingly complex compliance terrain, leaving fewer resources to invest in service innovation and development. 

Merger & Acquisition activity will boom

Technological innovation has, for some time, been dominated by a boom in specialised but small start-ups, which are able to identify and develop nimble solutions to niche problems that traditional corporations often don’t have the capacity or capital to address. This has disrupted traditional partner-supplier relationships, with larger corporations moving away from sub-contracting specialists to provide innovative solutions and instead acquiring these companies to boost their own skill set. Moving into 2018, we can expect to see a continued shift towards mergers & acquisitions, with large companies snapping up start-ups for their specialist services and knowledge, with a focus on technology and software. 

Reshoring will accelerate

IT is no longer a tangential business unit confined to a stuffy basement, but one of the central components of a successful enterprise strategy. Business leaders are increasingly recognising the significance of technology to their organisation. As the cost of delivering services using automation is significantly lower, the need for offshoring to control costs has been negated. As a result, many organisations are looking to move their operations back onto home soil in 2018.

Related: IT outsourcing market reaches tipping point, top 30 firms in UK.