Vitaly Plitchenko, Market Analyst of Apriorit is working on software product and service market analysis focusing mostly on the security, virtualization, and cloud computing segments. His work helps Apriorit and its customers to find new opportunities and adjust product strategies.
The favorite thing to do for industry analytics in the first half of the year is to try and predict major trends that will roughly persist all throughout the year. This is also true for IT outsourcing industry, where a number of leading experts, including Gartner, KPMG Shared Service & Outsourcing Institute, CIO magazine, and others created their own lists of major trends for 2016. Such predictions can be very helpful in keeping up with the industry and knowing where it’s moving next.
This is why we decided to take results of these predictions and see how they apply to our own, slightly narrower and more specific field – software research and development outsourcing.
Eventually, we settled on the following six major trends that in our opinion persist through R&D outsourcing industry and have the biggest effect:
- Managed units are trending
- Cost is still a “hygiene factor”, but clients look for quality and skills
- Importance of flexibility
- Increased role of innovation
- Run-the-business IT vs change-the-business IT defines the way outsourcing is used
- Increasing security requirements
These trends show us that the industry is changing, with the rising emphasis on unique skills and managed service that will be strictly catered to client’s needs.
Let’s take the first trend on the list as an example. While demand for managed units is a global IT outsourcing trend that emerges across the industry as a whole, in the contexts of software R&D it means managed teams.
This means that clients are no longer interested in spending money and human resources on managing developers themselves. Such management is hard, costly and requires a lot of experience, prompting clients to shift the task and all responsibilities that go with it on outsourcing providers.
Managed unit scheme allows companies to increase the efficiency of development process and up the quality of results, while saving themselves the management resources for the strategic-level tasks.
However, this also means bad news for smaller companies that does not have required staff and expertise to effectively manage projects.
Other trends show us that low price is no longer the main thing clients are seeking. Instead, software executives are constantly putting an emphasis on skills, use of newest technologies and inclusion of best practices in the work. Talent acquisition and management are becoming increasingly hard domestically, prompting clients to take interest in a unique experience accumulated by Software R&D outsourcing providers.
However, this trend serves as a double-edged sword for providers, as it means that lower costs are no longer enough to attract clients. They are now required to present something that will differentiate them among the fierce competition out there – be it a unique set of skills, rare specialty or a flexible approach to business and team management.
Another major takeaway from this list is that not every problem in our industry is solved. Certain risks are still stopping some companies from fully committing to software outsourcing. Security risks and headaches of managing distributed development teams are the main avenues that affect decision makers and this is where our industry should currently step up its game.
You can find out more details on how each of these trends affects software R&D outsourcing industry by reading the article here.
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