Reducing operating costs through IT outsourcing

Reducing operating costs through IT outsourcing

Costs rising

As we enter 2023, business leaders remain confronted by a difficult economic landscape. Inflation continues to ride high across many major economies – at or near double digits – and key costs are at elevated levels: energy, materials, shipping and distribution, staff costs. The World Economic Forum’s Global Risks Report 2023 highlights inflation and the cost of living as the most severe near-term risks faced globally. Price rises are reaching every corner of commerce: many organisations are now experiencing increased cloud hosting rates, for example. As so many businesses have moved the majority of their technology into the cloud, the impact of this could be material.

In the 2022 Nash Squared Digital Leadership Report, 60% of digital leaders said that salary demands had become ‘unsustainable’. At the same time, 70% of leaders said that skills shortages were preventing their organisation from keeping up with the pace of change. This demonstrates both the huge value placed on skilled tech talent in this age of digitisation, and the scarcity of that talent which is pushing market rates inexorably up. It’s a skills gap that shows little sign of being solved any time soon.

Operating efficiencies needed

With so many cost pressures and likely tightening demand as business and personal customers tighten their belts, cost efficiency and optimisation will be increasingly important. This will extend across all aspects of an enterprise’s activities – and technology and IT will be a key thread. Nearly every area of a business is enabled by technology, after all. In addition, the technology team can be a significant cost centre in its own right.

For these reasons, IT outsourcing is expected to be a big trend in 2023. Done well, the outsourcing of technology development and services can be a significant cost optimiser without sacrificing quality that propels the business along its digitisation journey – rather than freezing activity and putting projects on hold.

Software development outsourcing

Software development will be the principal area of focus for this. Organisations can’t afford to let up on development, as digitisation is a key lever in becoming more efficient, connected and customer-centric. However, software development is costly. Hiring and running a team of highly qualified engineers, architects and developers becomes a major area of expense. This is becoming more challenging in the current constrained cost environment – and there is also the challenge of obtaining the people needed given skills shortages and the war for talent.

However, in a global economy, why not take advantage of the expertise that exists around the world and at lower cost through an outsourcing partner arrangement?

With the right partner, the argument for an outsourcing model for software development and technology solutions is compelling. It is highly flexible, with the ability to quickly scale resource up or down as circumstances require. The outsourced team can run activity entirely, or work as a supplement to the existing inhouse team. Accountability and responsibility are built in – in many cases, senior members of the outsourcing team such as technical architects will be based on site with the client, and an onshore engagement manager will also act as a regular liaison and conduit, providing the client with regular updates and activity reports. There is also the possibility of leveraging time zone differences to create a “follow the sun” model where work is carried out in one geography while the client sleeps and then handed over to another team in another part of the world to continue. At NashTech, for example, we have development resources in Vietnam, Latin America, Eastern Europe and India. We can utilise our global presence to provide continuous support, depending on the requirements of the project.

Whatever the model, collaboration and partnership should be absolute watchwords. It’s all about building a positive and sustainable relationship, founded on trust, that puts quality and value at the heart.

Hot areas in 2023

There are several areas that are expected to be the focus for development outsourcing in 2023. As well as enterprise application development (and modernisation), RPA will continue to be a hot area as businesses look to automate processes, driving efficiency and freeing up staff time to focus on value-adding activities – which means ‘taking the robot out of the human.

Additionally, services relating to data will be in high demand. Data is the lifeblood of the modern enterprise and is key to deriving insights to improve operational efficiency and deepen customer engagement. As such, leveraging business intelligence (BI) platforms to build BI solutions enabling data-driven decision-making and regulatory reporting, such as Environmental, Social and Governance (ESG), will be areas where outsourced services can bring significant value. Testing will also continue to be a high-demand service, both of the security of applications (penetration testing) and their functional efficiency and performance.

Business Process Solutions

Another important area for outsourcing is Business Process Solutions (BPS). This enables businesses to outsource labour intensive manual processes that absorb significant amounts of staff time, such as data entry, data processing, coding and reconciliations. While it may not be possible to completely automate these (due to high levels of unstructured data, for example) at NashTech we offer automation-enabled outsourcing where we design a process solution that we manage and run for clients.

At NashTech we automate as many elements of the process as possible, optimising efficiency and lowering costs. We offer skilled offshore and onshore resources to execute those process steps where automation is not suitable, giving our clients cost advantage and added flexibility to adopt technology or human skill sets where they are most suited.

Why NashTech?

Choosing the right partner is critically important. At NashTech, we are proud of our track record and proven results. We take a truly collaborative approach, looking to build long-term relationships with clients based on quality and trust. Our global footprint means we can offer solutions to meet clients’ varying needs. We are committed to quality, investing in our people and holding key accreditations such as ISO 9001 (quality management), ISO 27001:2013 (information security) and CMMI Level 5 (software processes). We are technology agnostic, but have excellent credentials with major providers. For example, three of the five Microsoft MVPs (Most Valuable Professionals) in Vietnam work at NashTech. Because we invest in our people and take a team approach, attrition rates are low meaning we can provide strong continuity of people and teams.

In financially constrained times, outsourced technology solutions and services can help businesses lower costs while maintaining the highest levels of quality. If you would like to discuss any aspect of outsourced service provision, please don’t hesitate to get in touch.

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