IT offshoring providers need innovation-driven approach

1206711_digital_worldYou need to provide a new managed-services model if you want to satisfy your customers. IT offshoring companies require innovative actions if they strive for maintaining the competitive edge. The long term price focused outsourcing contracts are definitely over.

IT outsourcing is still developing despite the downturn

Those, who were predicting IT outsourcing downtime during the global downturn, are proved to be partly wrong. We may notice IT outsourcing growing at a slower pace but still continuously growing. On the other hand the market is changing dramatically. Due to the growth decrease competition in the IT outsourcing field has increased. Hundreds of IT service providers were competing to retain their existing client base.

Quality-oriented model of IT outsourcing grows in popularity.

Due to the large amount of changes which were caused by the crisis, to stay competitive IT providers had no choice but change most of their practices. According to 2008-09 survey of the global IT offshoring and outsourcing industry conducted by McKinsey, especially smaller more specialized providers occur to be the most successful. They are more quality-oriented rather than long contract term and low rate focused. They add value to their client’s business by providing managed services that fit their needs. The successful providers invested a lot of time in understanding their clients’ business by gaining domain expertise. They offer new ways of collaboration.

In this way, those well performing providers in the IT outsourcing world, assure themselves their client’s satisfaction. By contrast, according to clients, other IT providers from Tier-1 and Tier-2 companies are focused mainly on doing their “average job” without any noticeable improvement involved.

It is supposed that the smaller specialized IT providers will survive the downturn as the winners and they will become a more serious competition to the Tier-1 and Tier-2 providers than ever before.

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Peter Horsten

VP Software Development Europe for Aspire Systems. Sociologist and electrotechnical engineer, a great combination that stimulates him to look for the best working software solutions for clients. Passionate about converting great ideas into new solutions. Married and a proud father of 3 great sons. Training for and participating in triathlons/runs to stay fit.