Why the traditional IT outsourcing business model needs redefinition

Over the last decade, we have seen some incredible advances in technology, with prime examples including the introduction of robotic process automation (RPA), artificial intelligence (AI) and machine learning (ML). When integrated into an IT business model via outsourcing, these technological advances have not only transformed day-to-day operations, but in many cases, have also transformed job roles, increased cost efficiencies and driven growth.

Yet, with advancing technology has come a widening skills gap, where growth in the use of these technologies, together with the cloud, has meant stakeholders are having to constantly play catch up as the pace of advancement increases. It’s tough to stay current, utilising and engaging with technology that is hard to get to grips with, let alone control, develop and leverage, and the fact is, there is no sign of it stopping any time soon.

This situation presents an interesting and difficult challenge: Although technology has fundamentally changed, the skillset of the stakeholders that utilise and engage with it hasn’t, creating an increasing reliance on third party providers – the capable digital elite – who have built and grown their business model based on the inability and failure of others to adapt and change.

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As the skills gap widens, it seems we’ve reached a point where we either continue to accept the norm or we take a stand and do something about it. This doesn’t mean outsourcing is dead, but rather should be redefined, allowing clients to seek the opportunity to become self-sufficient in the knowledge that technology will continue to become far more central to the front end of their business process. In essence, outsourcing should be seen as more of a ‘not optional imperative’ to get control and drive leverage versus have it done for or to you.

However, businesses aren’t hearing enough from the outsourcing stalwarts to give them the confidence that this redefined perspective is possible or that it even exists. The fact that their underlying business model relies on utilising significant tranches of resource to execute, as well as generate revenue, means that they will always be somewhat compromised by a client’s want to do things themselves. Yet, like a lot of industries right now, IT consultancies should be looking at their options and how they can sustain their existing business, whilst also cannibalising it so they can stay current. Here’s why:

Built on failure, not success

Over the last 10 or 20 years, nothing has really changed within the IT industry in that consultancy firms are still completely reliant on companies failing in the management and leverage of their own technology in order for them to exist.

It is this main ethos – the consultancy model based on failure and reliance – where a mindset shift needs to take place. Most industries exist to benefit their stakeholders, not to limit them. In making way for a new model, one that supports and empowers businesses to better understand and control their own technology, the IT industry could change for the better, whilst improving the skillset and capability of an organisation and the individual team members within it.

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Digital skills are required in at least 82% of online advertised job openings across the UK, according to the Department for Digital, Culture, Media & Sport (DCMS), but there is currently a mass deficit of suitable talent. This means, with the right staff, the right digital skillset and the latest technology in place, businesses can quickly outpace their more inertia-fuelled competition.

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Despite alarming statistics, more and more businesses are, in fact, waking up to the realisation of the growing digital skills gap and understand that they need to take ownership of their digitalisation to leverage next generation technologies and gain competitive advantage.

However, a chicken and egg scenario remains, in that a business still needs to call on an external consultancy to enable it to implement and/or migrate to advancing technologies before gaining any competitive advantage.

Unfortunately, this is the point where the skills gap grows, where a consultancy takes over and the business halts any progression in digital skillset. It is here where we need to implement real change, to help businesses move past this initial painful period and accelerate towards self-sufficiency.

Self-sufficiency increases opportunity

A business that can think for themselves and make important technology-based decisions instantly, rather than waiting on a third party to tell them what they think is right, is one with real opportunity for growth.

The traditional IT outsourcing model holds businesses back from this point, preventing them from really leveraging next generation technologies and accelerating towards self-sufficiency.

This should be the new realm of IT consulting, a realm that quickly identifies what a business needs and works closely with stakeholders to incubate their skillset, and, thereafter, leaving them in control to drive future scalability and growth.

Ultimately, technology is incredible and has the potential to transform any business into something exceptional. But only if we – members of the digital elite – let them.

Written by Adrian Overall, CEO of CloudStratex

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