Topic > The Development of IT Function Outsourcing

Once becoming popular, IT outsourcing remains a solid economic player with the huge amount of revenue generated. Statista research highlights that information technology outsourcing generated $52. 6 billion in 2016. While the trend showed a stable increase in revenues until 2012, reaching 62 dollars. 6 billion, the expiration of previously signed huge contracts and their termination mainly due to quality issues (Deloitte, 2012) resulted in a drastic decline in 2013 ($55.2 billion). Say no to plagiarism. Get a tailor-made essay on "Why Violent Video Games Shouldn't Be Banned"? Get an original essayIn one year the numbers went in a different direction ($76.1 billion), however, companies' concerns towards outsourcing, as well as regulatory issues and legislative changes imposed on outsourcing (Deloitte, 2014) have shifted the trend downwards again. Regardless of previous fluctuations in the amount of revenue generated by the industry, the year 2017 reveals a growing enthusiasm for the outsourcing of IT functions. As regards the outsourcing of software application development (which is the subdomain that generates the greatest revenue), for example, the increase in The number of respondents who have decided to transfer this activity to third-party suppliers is equal to 12%, going from 52% in 2016 to 64% in 2017 (Statista, 2017). The overall delta for the same periods in 2016 and 2017 now remains at +13%, anticipating a positive movement in revenue generated. Apart from the absence of a stable trend in terms of revenues generated, the logic of outsourcers is also transforming. Prior to 2013, cost reduction was the primary motivating factor for the vast majority of Deloitte respondents, finding that 62% considered this factor “very important” and a further 25% said this motivation was “important” (Deloitte , 2012). However, the poor quality of the solutions provided, as well as general dissatisfaction with the results, led to the termination of a large number of contracts and the relocation of activities on-site. For 2016 the situation has changed radically. While cost reduction remains the key motivation for companies outsourcing (overall 59% consider this motivation "very important" or "important"), non-financial factors have begun to gain popularity. For example, 31% of companies Respondents began to believe that outsourcing is aimed at increasing the quality of service, 28% considered it essential to have access to intellectual capital and exclusive skills and 17% even stated that the outsourcing drives transformational change in an organization (Deloitte, 2016). 35% of customers seek innovation by transferring work to another company, declaring a very positive attitude towards the outsourcing of development activities. However, outsourcers report an extensive list of problems. And here we can also detect a paradigm shift. While in the 2012 survey, 81% of dissatisfied respondents reported failures related to project management (52% were dissatisfied with underestimation of scope/effort and 29% blamed suppliers for failures in planning, which had a lot to do with both the inability to deliver products/services on time and slow reaction to customer requests) (Deloitte, 2012), the situation in 2016 showed attitudes different. 46% of dissatisfied buyers say suppliers lack a proactive approach and only address issues reactively, 33% are dissatisfied with the rate of.