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10 IT outsourcing trends to watch in 2014

Stephanie Overby | Jan. 20, 2014
IT outsourcing experts tell us what to expect in the year ahead. And if they're right, this could be the year customers -- and a few robots -- take greater control of the IT outsourcing space.

3. An Increase in Insourcing
"Of the IT services historically outsourced, 20 to 30 percent will be brought back in-house as buyers are more comfortable to create retained organizations that not only govern the services, but start to move more into operational control of the services," says Stan Lepeak, global research director for KPMG Advisory. Companies will rely on IT service management frameworks like version three of the Information Technology Infrastructure Library to manage the increased insourcing.

But expect the industry press to make a bigger deal about such backsourcing than it deserves, says Wagner of Alsbridge.

4. Service Integration Comes Home
IT leaders have given third parties a shot managing their multi-sourced environments in recent years. In 2014, they'll take on service integration themselves. "Following a period of experimentation with various outsourced models, client organizations will increasingly focus on service integration as an integral core competency and take key functions back in-house," says Lois Coatney, director with outsourcing consultancy Information Services Group (ISG).

"In outsourced models, clients have found they lose visibility and direct control of service management effectiveness, and that they become too remote and unable to fill their fiduciary responsibility. Clients are recognizing that a solid internal service integration capability provides better flexibility and knowledge of the business required to onboard new and specialty service providers," says Coatney.

5. The Cloud Gets Grounded
There's little doubt that cloud computing is here to stay, but businesses have struggled to managed such IT services effectively. "In 2014, we expect clients and service providers to further define their strategic objectives for cloud services, applying consistent metrics to quantify their return on investment and navigate a rapidly evolving contracting environment," says Scott Feuless, principal consultant with ISG. "One key will be progress towards normalized measurement frameworks that enable meaningful comparisons of alternative solutions."

Ultimately, companies will be able to perform apples-to-apples comparisons of different cloud options, as well as comparisons of cloud vs. traditional solutions. "The result will be significant progress in reaping the benefits of cloud services, as buyers avoid the mistakes of early adopters," Fueless says. "Service providers will adjust their offerings to meet the needs of a more cautious and educated market."

6. Contracts Compel Inter-Provider Cooperation
Why can't they all just get along? This year, they'll be legally required to. "As organizations continue to implement a multi-sourcing, best-of-breed strategy customers need to find a way to force competitive service providers to work together to achieve common goals," says Helms of K&L Gates. In 2013, some outsourcing customers implemented outsourcing "cooperation agreements" that contractually obligated service providers to cooperate at an operational level. "I predict that 2014 will see an increased use of outsourcing cooperation agreements," Helms says.


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