The Evolution of Outsourcing
The outsourcing model has changed throughout the years. The first iteration of outsourcing could be called Outsourcing 1.0, which focused on IT-centric services like back-office support and help desk, along with a strong focus on cost savings. Version 2.0 saw the birth of software development services and what are now considered traditional outsourcing operations like staff augmentation and offshore product development. The next iteration of outsourcing – 3.0 for our purposes – brought about blended teams of onshore and offshore, the emergence of rightshoring as a strategy, and highly skilled developers in specific technologies. The current version of outsourcing, which surfaced around 2015 is a function of the geographically dispersed nature of the global marketplace, prizing a global workforce of skilled software engineers adept at understanding the business value associated with an ecosystem-oriented approach to software. In fact, the current state of outsourcing, beholden to nothing besides providing the best business value for the highest quality work, is at its core a hybrid-outsourcing approach that combines many of the facets of earlier versions (staff augmentation, rightshoring, skilled employees) and adds perhaps the most important distinction: innovation.
The Advent of Hybrid Outsourcing
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Today, due to the necessity of leveraging the right resources for any project, the hybrid outsourcing model is responsible for the digital transformation of enterprises across enterprise industries. Many of these industries – healthcare and financial services, for example – are in need of digital transformation. To accomplish that, they are turning toward software engineering companies that are able to utilize a hybrid outsourcing model to drive innovation and non-traditional problem solving.
There are four keys points of hybrid outsourcing that are driving innovation in enterprise organizations:
- It promotes teamwork. One of the most important things in this new era of hybrid outsourcing is the ability to create teams of engineers and project managers who can work seamlessly toward the same project outcomes. This might seem like a given, but, when projects become sophisticated, team members need to feel comfortable leveraging all of the skill sets available and using those skills to bring innovative solutions to the table. For some companies, bringing in outside team members from consulting or outsourcing operations may initially feel disruptive, but, because of the complexity of the project, it turns out to be a plus.
- It localizes projects. A big turn-off for companies looking to outsource projects is the idea of having very little contact with a development team, which could be in another country, with very little working knowledge of the setting in which the project will be deployed. By providing highly skilled engineers familiar with the market demands and business value of the project, staff augmentation solves many more problems that it creates. In order to develop innovative solutions, software engineers need to understand the business value, and part of understanding the business value is understanding the localized market.
- It prioritizes non-traditional problem solving. Innovation, by its nature, requires new approaches and ideas. A hybrid outsourcing model relies on bringing a wide range of skill sets and ideas to the table in order to solve industry problems in non-traditional ways. For software engineers, that may mean working with leading- or bleeding-edge technology that isn’t yet being widely used or looking to disruption to change the way people think about industry practices.
- Most importantly, it looks to the future. We are in a new era of software development. The technology stacks being used by engineers have changed, and they must not only understand how to develop for new platforms today (like IoT), but also develop for what those platforms might look like five, or even ten, years from now. Because innovation is such a key part of software engineering today, projects need to be developed with an understanding of long-term business value, as well as long-term functionality.
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Outsourcing undergoes natural transitions as the markets, technologies and demands change. We’ve gone from highly siloed, IT-centric operations to outsourcing being looked at as a key piece driving innovation within critical industries. The hybrid outsourcing model is intriguing and disruptive. We could be seeing significant technological shifts in the near future using new models with new, innovative priorities.