May 4, 2017 by Canadian Underwriter
How much of a priority organizations view IT services seems to be influencing decisions around using in-house resources rather than outsourcing services to an external vendor, suggests a new survey of IT decision-makers south of the border.
Released Wednesday, the research indicates surveyed enterprises are increasingly tapping internal and U.S. resources to address IT services needs, reports Washington, D.C.-based Clutch, a business-to-business research and review platform.
“Given the current premium placed on IT services, it is imperative that enterprises make fully informed decisions regarding how to prioritize investments and address service needs in the IT space,” notes the report detailing survey findings.
“As IT functions become increasingly critical to the operation of the enterprise, many decision-makers want more control over how these functions are managed, thus, prefer to keep IT work in-house,” Clutch reports in a statement.
“If you think of types of more specialized work like mobility, I think organizations are going to try to do it themselves and have that control,” Mike Hughes, founder of low-code platform developer Outsystems suggests in the statement.
The research shows about half of the 582 surveyed, U.S.-based, IT decision-makers – working at companies with 500-plus staff – say they are trending toward using more in-house resources for IT services in 2017. Findings also reflect insights from IT experts.
Richard Rabins, CEO of app development software firm Alpha Software, identifies two factors driving that trend: the tech-savvy of incoming workforce generations; and the decrease in complexity of actual information technology.
“We’re entering into a new phase of workers who have a reasonable amount of technical savviness,” Rabins notes in the report. “At the IT level, [in-house personnel] don’t have to be superstar developers – you can give them one of these low code products and make them productive,” he points out.
“The influx of these less-experienced, yet technically adept, young developers, along with tools and resources better suited for beginners, provide dynamic resources for enterprises to employ for addressing IT needs,” the report explains.
The combination of minimal risk and maximum control that in-house resources can provide entice enterprises to build out their internal IT assets, Clutch notes.
“Enterprises most commonly employ third-party providers for IT services that concern data security and management – which also happen to be the central tenets of enterprise mobility strategies,” survey findings show.
“You want external people especially in security,” Magnus Jern, chief innovation officer for DMI (Digital Management, Inc.), an end-to-end mobility firm, suggests in the report.
“You can’t really audit yourself. In addition, third-party providers bring IT experience from previous projects in the field, which they can use and reference to help better address enterprise IT service needs,” Jern contends.
“Two major reasons enterprises partner with external providers for IT include their objective perspectives and industry-specific skills, which internal teams may be incapable of replicating,” the report points out.
The shift to internal and domestic services is also being seen among enterprises that already outsource their IT needs. In all, almost 80% of such respondents “say they are trending toward hiring domestic providers over offshore firms in 2017,” Clutch reports.
Moving toward internal or U.S. resources, though, will likely take some doing. As it stands, 75% of polled enterprises now rely on third-party vendors for IT services.
“For this group, procuring the ideal provider for IT needs involves weighing the advantages and risks of domestic and offshore providers,” the company explains.
“Enterprises cite better quality, communication and security to explain their trend of favouring domestic providers over offshoring for IT services,” the report states.
Specifically, quality of service was listed by 36% of respondents and communication by 23% as the primary benefits of partnering with domestic firms; communication was listed by 26% and security by 22% as the primary challenges of partnering with offshore providers.
“A breakdown in communication between your internal team and your IT service provider results in elongated projects and a drop in delivery quality,” Varun Dogra, chief technology officer for DMI’s government practice, notes in the survey report.
Still, offshore resources – a popular IT procurement strategy among enterprises – seem to have staying power. This persistence can be attributed, in part, to the value that offshore vendors provide clients through cost savings.
“Enterprises identified ‘value’ as the primary benefit of offshore resources, while ‘cost’ is the biggest challenge of partnering with a domestic firm,” Clutch reports.
Findings further indicate that just 22% of respondents are unlikely to use an offshore IT vendor in the future.
Other survey findings include the following:
“Given the importance of IT, the issue of who to trust to address IT services needs now qualifies as a major concern and strategic initiative among enterprise decision-makers,” the report concludes.