Looking back on a somewhat turbulent 2018, with Brexit worries, a widening IT Skills gap and prevalent fears of job losses due to the introduction of an automated workforce, it can be seen as quite a challenging twelve months. So, as 2019 gets into full swing, what’s in store for the outsourcing and nearshoring industry? How will the uncertainty around Brexit affect the industry, and how will non-stop tech innovation combined with the IT skills gap play out over the next twelve months?
The ongoing talent shortage:
One of the greatest challenges for the outsourcing and nearshoring industry in 2018 was overcoming the talent shortage. The increasing demand of digitalisation makes this evermore visible. The effects of the skills shortage is especially tangible outside of London, as graduates relocate to the capital city from other areas as they hunt for a job. This has resulted in a significant regional challenge for the outsourcing industry.
Alongside this, many companies struggle to hire in-house and often stop trying after several months. Usually, this is due to fierce competition and finding the right talent with the right skills. There’s a continuous battle to attract talent to your company, but nearshoring can provide either a temporary or permanent solution for businesses looking to grow.
Poland’s Gliwice emerges as hotspot for software development outsourcing
Information Age recently visited Gliwice in Poland to learn about how the area’s proximity to western capitals, large talent pool, and lower costs of labour has made it a hotbed for tech innovation. We also visited Future Processing, to look at how they’ve emerged as one of the regions leading software development outsourcing firms
Throughout 2018, an increasing number of business began to realise that technology can no longer be considered a ‘cost’ for the business, but rather a differentiator. Businesses are looking at technology as an investment rather than an opportunity, and are switching to IT systems and new technologies rather than internal processes—which means that the skills gap is only widening. The problem is set to continue as, despite the fact that there are many qualified graduates, the demand is higher than ever for technology skills.
However, that isn’t the only challenge. An increasing amount of graduates are also coming off the market because many of them look to set up their own IT companies after they finish their studies. Despite their technical knowledge, some graduates are unaware of the criteria that they should be using and lack the business acumen: they are uncertain about the process as a whole and undoubtedly require guidance along the way—something that can also be received from nearshoring and outsourcing companies.
Although technical projects are required, an increasing amount of companies are also looking to outsource innovation too. With IT skills hard to come by, the prevalence of innovative technology like blockchain and artificial intelligence is making it hard to find the talent, as the cost of hiring internal talent that can drive innovation is now higher than ever.
Three strategies for outsourcing software development effectively
Outsourcing software development can be valuable and highly useful, when done right, but if it is implemented incorrectly, it could stifle productivity. We have outsourced to Alejandro Vásquez from PSL to explain further
These trends are only set to continue in the new year: talent shortages and technical disruption will still be hot topics and businesses will still look to pursue new opportunities. The development of the latest technologies, like blockchain and cryptocurrency, will continue, while the majority of new systems will be cloud-based as financial and insurance companies are now ready to adapt and consider the latest industry advances. Additionally, this means that cloud security will be of even greater importance than ever before as almost everything can be done in the cloud. So, businesses will have to adapt to all of this and continue to fight against the skills shortage – all within the uncertain landscape of Brexit.
What about Brexit?
As we all puzzle over Brexit and what the 29th March 2019 will bring, it’s important also to consider its impact on the outsourcing industry. With the discussions that we’ve had with our UK clients, it seems that there are a multitude of outcomes, none of which have been determined yet. The UK economy is hugely reliant on outsourcing and so the skills gap will only widen further. Organisations may be set to experience a greater lack of people alongside inflation in wages for IT professionals as the demand increases for outsourcing outside of the UK. This could also be reflected in a dip in the worth of the GBP as naturally, the next few years may be quite turbulent. Ultimately, businesses could end up paying more for the same services.
The week in tech
Additionally, when it comes to partnerships between companies, developing a productive and efficient relationship will be of great importance. Especially within the UK, cultural alignment will be vital as trade deals seem uncertain. Partnerships that can adapt to ever-changing environments and technological development can provide true value. As we head into the new year, the large corporate businesses will become more open to working with new vendors as they search for agility and valuable partnerships.
Overall, in 2018 we have seen a movement of digitalisation and disruption that is spreading across a variety of organisations. Using technology to leverage the business operations will have a greater impact on outsourcing. Brexit may provide an obstacle, but businesses will find a way to pull through. If we look back to the financial crisis of 2008, businesses reduced their IT budgets with significant cost reductions, but more organisations turned to outsourcing instead – this ultimately turned out to be an opportunity for industry, and the same might just happen with Brexit.
Written by Jarosław Granat, Head of Client Engagement and Dawid Przespolewski, Head of Business Development at Future Processing