7 HOT IT OUTSOURCING TRENDS — AND 7 GOING COLD by Stephanie Overby Featured in IT News, July 19, 2017

The days of low-cost commodity services are waning, as IT organizations seek stronger strategic partnerships with IT outsourcing providers in the era of digital transformation.

As IT organizations become more strategic, so too do their partnerships with IT outsourcing providers. Digital transformation, automation, and the data revolution are not just shaking up how IT operates, they are greatly impacting the kind — and quality — of services under contract with IT outsourcing firms.

Here is a look at the technologies, strategies and shifting customer demands shaking up IT outsourcing right now and the once-hot developments that are beginning to cool. If you’re looking to leverage an IT outsourcing partnership, or want to make good on the market for IT outsourcing as a provider yourself, the following heat index of IT outsourcing trends should be your guide.

Heating up: Rapid software development

IT organizations are increasingly looking for partners who can work with them as they embrace agile development and devops approaches. “Organizations are rapidly transforming to agile enterprises that require rapid development cycles and close coordination between business, engineering and operations,” says Steve Hall, a partner with sourcing consultancy Information Services Group (ISG). “Global delivery requires a globally distributed agile process to balance the need for speed and current cost pressures.”

Cooling down: IT services silos

As companies embrace new development methodologies and infrastructure choices, many standalone IT service areas no longer make sense. “In the past, companies may have sourced app services from one provider and secured cloud services from another,” says Ollie O’Donoghue, senior research analyst with HfS Research. “Now, thanks to new methodologies like devops and the increased ‘cloudification’ of business infrastructure, the lines between distinct IT services are blurring. Service providers and clients are far more likely to procure a blend of IT services to deliver business outcomes from a single vendor [rather than] contracting segments of IT out to a range of suppliers.”

Digital transformation is driving demand away from compartmentalization and silos of service delivery and toward frictionless integration, says David J. Brown, global head of KPMG’s Shared Services and Outsourcing Advisory.

Some IT service providers are becoming one-stop shops for their clients through brokerage services or partnership agreements. “Offering clients a full spectrum of services from best-in-class providers is enabling providers to broaden the scope of their offerings, and clients to select the technologies and services that suit them,” says O’Donoghue. “Even large providers which formerly cornered the market with proprietary technology are starting to champion vendor agnosticism in a bid to offer clients impartial, best-in-class IT services.”

Heating up: Cloud integration

Enterprises are moving more workloads to the public cloud, but continuing to run certain applications in dedicated private cloud environments for security, regulatory or competitive reasons. So they’re looking for providers that can seamlessly manage and integrate their hybrid cloud environments, says Rahul Singh, managing director with business transformation and outsourcing consultancy Pace Harmon. “Increasing adoption of software-as-a-service models for specific applications (such as Salesforce and Workday) creates further operational complexity for enterprises,” Singh adds.

Cooling down: Traditional remote infrastructure management

Over the past decade, the offshore delivery of infrastructure management services — from network services and help desk support to server maintenance and desktop management — became mainstream. But remote infrastructure management (RIM) is no longer a growth industry for IT services providers; it can’t compete on price with the public cloud, where adoption rates are growing at compound rates of 25 percent a year. “Almost every enterprise is taking a cloud-first strategy,” explains ISG’s Hall. “Service providers are shifting to cloud management services; but with the double whammy of integrated devops, even this is a short-lived venture.”

Heating up: Talent wars

An increase in consultancy-led engagements and the subsequent demand for more specialists and advisors in IT outsourcing is inspiring IT service providers to turn their attention to talent acquisition and retention, according to analysts at HfS Research. “The challenge of recruiting and retaining the talent necessary to deliver high-quality services has been brewing for some time,” says O’Donoghue. “The spectrum of skills in demand is becoming more focused, [and] providers seeking to compete in the modern marketplace will need to work harder to attract talent.”

Cooling down: Labor arbitrage campaigns

Sourcing IT services in the lowest-cost locations is no longer a competitive advantage, as clients demand use of automation and tools to drive efficiencies instead. “Organizations are driving massive productivity improvements through technology, not labor,” says ISG’s Hall. “Developing a solution that is based on low-cost labor won’t even get a CIO meeting in today’s market. Top IT leaders are driving massive digital transformation projects, and most service providers have adapted their message and core capabilities to be more than low-cost labor.”

Geography is becoming increasingly irrelevant to outsourcing decisions, says Marcos Jimenez, CEO of Softtek US and Canada. “Customers demand providers who are responsive, flexible, innovative and able to leverage emerging technology and solve business problems. They don’t care about where the work is done.”

Heating up: Automation results

Cost savings based on human labor are being supplanted by those delivered by so-called “digital labor.” Enterprises are demanding automation capabilities from their outsourced providers. “Automation not only provides increased efficiencies but also brings proactive capabilities to deal with issues before they become business-impacting events, which adds significant value to enterprises beyond the typical cost reduction opportunities,” says Singh of Pace Harmon.

Automation is taking hold across middle and back-office functions that have been traditionally outsourced. “If you want to compete, you must automate,” agrees ISG’s Hall. “This is causing disruption in traditional sourcing models and driving service providers to make big bets and commitments on future pricing.”

Innovative clients and providers are taking an “automation first” approach, says Rajeev Tyagi, chief operating officer at Softtek. “Rather than identifying human activities within an IT or business process that can be automated, enterprises will use digital labor as the starting point,” he says.

Cooling down: Automation hype

The results of automation are also becoming more transparent. Service providers are now expected to detail the iterative efficiencies that automation will create for clients, says Jamie Snowdon, chief data officer for HfS Research. Unfortunately for providers, that means they can no longer keep the savings to themselves. “Undoubtedly, as newer forms and blends of automation technologies enter the marketplace, vendors will be increasingly required to share the benefits with their well-informed clients,” says Snowdon.

Heating up: Captive offshore delivery centers

With technology becoming a competitive differentiator across industries, every company is becoming a tech company — from automakers to oil and gas providers to retailers. And that’s leading a broader swath of previous IT outsourcing customers to set up their own captive technology services delivery centers offshore, says Hall of ISG. “To compete and scale, enterprises want ‘badged’ resources, which means captives are back as a popular model to accelerate the adoption of automation and maintain the intellectual property for cutting-edge solutions.”

Cooling down: Low-cost service desks and call centers

Likewise, in an era that values superior customer and employee experiences, companies are placing more emphasis on the resources and technology employed to operate their internal service desks and customer-facing call centers.

“Call center consolidation and the desire to partner with strategic vendors continues, but call volumes are still high,” says Jimit Arora, a partner at Everest Group. “While virtual agents and chat bots are becoming prevalent, we see companies being reluctant to expose customers to these technologies just yet. They don’t want blow-back akin to interactive voice response system.”

Meanwhile, “the workplace of the future has made the service desk relevant again,” says Hall. “ CIOs and IT leaders quickly realized that outsourcing the ‘face to the business’ to a third party may not be in their best interest.  Look for more creative, on-site and integrated solutions as organizations integrate a complete workplace solution into their delivery models.”

Heating up: Populism and protectionism

Concerns about U.S. immigration reform and the impact of Brexit are driving some IT and business services back to domestic locations, says Stan Lepeak, director of KPMG’s Shared Services and Outsourcing Advisory.

Cooling down: H-1B panic

However, anxiety about potential changes to the H-1B program in the U.S. has been allayed — for now. “The Trump Administration’s early saber rattling appears to have sparked renewed interest in artificial intelligence and robotic processing as ways to reduce cost and eliminate jobs without offshoring,” says Dan Masur, partner in Mayer Brown’s Technology Transactions practice in Washington, D.C. “[But] other administration policies and objectives appear to have eclipsed outsourcing issues, at least for the moment.” Many of the biggest users of H-1B visas were already increasing their American hiring prior to the last election.

Heating up: Business-based metrics

One of the biggest changes facing the IT services industry in this period of business transformation is how to quantify services. Contracts are shifting from traditional input or transaction models to those built on business metrics and results. “We’ll soon see a move from traditional arrangements — like FTE models — pushing beyond convoluted outcome-focused metrics and into the heart of the client companies with business-linked metrics,” says Snowdon of HfS Research. “We can expect more deals to focus on specific outcomes measured by business metrics.”

Client expectations are rapidly evolving. HfS analysts are seeing client engagements begin with a particular business challenge, with prospective vendors asked to tailor a solution to them. The result is an increase in consultancy-led engagements, which carefully design solutions for the customer.

Cooling down: IT services industry growth

Secular forces have driven the outsourcing industry into significant deceleration. The results of the second quarter of 2017 have yet to be announced, but the top 20 publicly traded IT services companies saw 2.1 percent year-on-year organic growth in the first quarter, according to the Everest Group. “This is the lowest growth number in the last three years, and represents an industry that is witnessing significant pressures due to digital technologies, pervasive automation, new business models, and immigration-related concerns,” says Everest Group’s Arora.

The top five Indian IT companies have experienced seven straight quarter of growth deceleration with a forecast growth rate of less than seven percent over the next 12 months, according to Arora. The key will be to evolve from arbitrage-based models to those built for digital transformation, which will require all providers to spend capital on new capabilities.

Advantages & Disadvantages of Working Remotely

July 12, 2017

This Blog was originally posted on December 14, 2016 but because of high interest, we are running it again.

In 2015, it was estimated that almost 45% of US employees worked remotely, mostly from home. By 2020, it is estimated that about 50% of the workforce will be working remotely. Cloud services, mobile platforms and videoconferencing have made remote work possible and very acceptable to both employees and employers.

Many industries are making it known that they are friendly to telecommuting including IT, HR/Recruiting, Education, Accounting, Health, Law, Marketing, Nonprofit, News/Media, Sports, and Travel. In addition, the site FlexJobs.com was created to help those seeking telecommuting opportunities connect with companies and jobs that offer remote work, flexible schedules, part-time hours and freelance assignments.

However, with everything, there are pros and cons. So before you make the change from working in an office to working at home or from another location, you might want to first consider these advantages and disadvantages:

Advantages

Work from anywhere and anytime. No longer are you limited by a geographic location or a clock. Thanks to telecommuting, employees are now able to work from pretty much anywhere at any time of day. The traditional 9-5 working day no longer applies.

No daily commute. Most people don’t enjoy their daily trek into an office. Working remote allows you to avoid a lengthy commute by car, train, or bus which enables you to start your workday earlier and calmer.

Flexibility. You would be in charge of your own schedule and possibly more efficient. Working from home and the flexibility it offers, may also suit your family life. You would have the freedom to run errands, take the kids to school, attend school or sports functions, etc. as long as you get the job done and meet any pre-established deadlines.

Less costly. Working from a remote location or from home, means you save money on transportation costs, eating lunch out, and purchasing a business wardrobe. Unless you do video conferencing, you can wear informal clothes and no longer need to budget for that work wardrobe.

Better health. Remote workers say they have more time to incorporate physical exercise into their day. In addition, they are not exposed to sick co-workers. On the flip side, if you’re the sick person, staying home allows you to take care of yourself while still being productive.

Less interruptions. Working remotely allows you to focus on the job at hand without the distractions of socializing and office chatter. You have the ability to get into the zone and buckle down to complete your assignment.

Disadvantages

Need for high self-discipline. It takes a lot of dedication and self-control to work at home and not succumb to distractions. It’s easy to lose motivation and focus which are pitfalls to your success. Therefore, it’s important to be intentional about how you’re using your time. You need to structure your environment in such a way that keeps you engaged.

Lack of workplace social life. You can easily interact with co-workers and clients via technology but it’s not the same as face-to-face meetings, lunching together or just everyday banter. Remote workers often feel isolated. To counteract isolation, try going into the office now and then or schedule lunch dates with bosses and colleagues.

Overlooked for promotions. There’s a danger of being overlooked for promotions or career development opportunities when working remotely. Those visible employees in the office who are aggressively campaigning for the position will probably have the edge. You can try and counter with regular visits to the office and open lines of communication. You need to express your interest in the upward mobility you want.

Total dependency on technology. As a remote worker, you have to rely on email, smart phones, laptop, etc. to stay in contact with the office and clients. You are totally dependent on the right technology to be in business. It’s also up to you to keep up with technology that evolves so rapidly.

Blurred lines. You would think that working remote would allow you to enjoy more of a work/life balance but actually it doesn’t. When you don’t have a clear separation of workplace and home space, they can blend together. You might not be able to just switch-off from work and find yourself constantly checking your smart phone and emails.

There’s no doubt that remote work is on the rise. It’s easier than ever to stay connected in our era of email and smart phones and many employees believe it increases their quality of life.

Please let us know if you work remotely and if there are any other advantages or disadvantages than listed. You may comment below.

DCA & DRI Welcome Walter Groszeski as Director of Client Partnerships

June 19, 2017

Direct Consulting Associates (DCA), HIT Staffing, and Direct Recruiters, Inc. (DRI), HIT & Life Sciences Executive Search, are pleased to announce that Walter Groszewski has joined them as Director of Client Partnerships, HIT & Life Sciences.

Walter has over thirty-two years of experience in Business and Information Technology and over twenty of those years have been spent in the Healthcare and Life Sciences where he held several leadership positions.  He has an extensive background in cultivating deep client relationships and launching new businesses in Healthcare. He has been recognized with many awards for his achievements.

Walter is a passionate, innovative leader who has helped drive the transformation of the Healthcare and Life Sciences industries by helping them leverage the effective use of technology to improve operations.

According to Mike Silverstein, Managing Partner of HIT & Life Sciences, “I am really excited to welcome our new Director of Client Partnerships, Walter Groszewski, to our HIT & Life Sciences team. Walter brings an incredible amount of Healthcare experience and expertise and will be invaluable in our ability to provide great service to our market.”

Walter holds an MBA in Management from Pace University and a BS in Computer Science and Mathematics from Manhattan College.

Walter Groszewski: 914-954-8056 / wgroszewski@directrecruiters.com

Hiring the Right Leaders with Direct Retention Search

June 20, 2017

It’s no secret that leaders can make or break companies’ and organizations’ success. Hiring the right leaders is proving to be a challenge for a majority of companies in the United States. A Harvard Business Review article, “When Leaders are Hired for Talent but Fired for not Fitting in” said, “Based on a recent McKinsey report, fewer than 30% of organization can find the right C-suite leaders, and that newly appointed executives take too long to adapt.” Although there is a vast array of reasons why a new leadership hire may not work out, Harvard Business Review shared three errors organizations should fix to upgrade their selection of leaders:

  • Organizations need to understand the leader’s motives and values
  • Organizations need to understand their own culture
  • Organizations need to be realistic about the new leader’s ability to drive change within the company culture

At Direct Recruiters, Inc. and Direct Consulting Associates (DCA), we also noticed the growing problem of leadership retention, and companies’ ability to hire the right fit. Our solution for this is Direct Retention, which enables small to midsize companies to hire the best executive talent and leadership with confidence and reduced financial risk. Fully vetting candidates with our independent consultants gives us the ability to monetarily guarantee your key professionals will be retained for 1 to 2 years. Below are the following challenges organizations face and the solutions Direct Retention offers.

The Challenge: Finding Top Talent

  • Companies need talented individuals to fill key roles, but this talent is hard to find.

The Solution

  • DRI and DCA will source and recruit high-impact talent to fill your key positions. To do this, DRI and DCA will provide a consultative team approach through 5 phases including profiling client company to clearly understand business culture and the position, reviewing the ideal candidate profile, finding and providing clients with candidates to interview, assisting with the hiring process of chosen candidate, and finally following up after the hire.

The Challenge: Culture Fit

  • Companies know which skills and traits are needed to be successful in their organization. Finding professionals that match those skills may not be entirely clear through an interview process.

The Solution

  • DRI and DCA’s independent consultant, Pradco will conduct skills and cultural assessments backed by science and analytics to evaluate the candidates’ culture fit to the company, making it more clear who the best fit for the company will be.

The Challenge: Compensation

  • Salary and compensation is a large part of a candidates’ decision to accept a new job offer. If companies aren’t offering the right package, it could result in the loss of a great candidate.

The Solution

  • Organizational Consulting Group specializes in compensation studies to ensure offers and benefits packages or competitive and that the client is offering the candidate a reasonable compensation for the position.

The Challenge: Legal Restrictions

  • In the recruiting process, it is common for candidates to have contracts or legal restrictions that could prevent them from changing jobs.

The Solution

  • DRI and DCA’s independent Direct Retention Consultant, Dinn, Hochman & Potter LLC provides legal support to establish legitimacy and enforceability of any contractual, statutory, or common law restrictions from previous employers.

The Challenge: Relocation

  • Top candidates oftentimes need to be relocated to their new position. Clients need to offer the candidates a way for them to make a smooth transition for themselves and their families.

The Solution

HR & Relo Advisors provides relocation assistance and planning to companies to ensure smooth onboarding and transition of the new candidates.

DCA & DRI Named as Top Workplaces 2017 by The Cleveland Plain Dealer

June 18, 2017

The Direct Companies of DCA and DRI have been recognized as Top Workplaces for 2017 by the Cleveland Plain Dealer and WorkplaceDynamics! We are pleased to be a second-time recipient of this award in the “small business” category. Top Workplaces singles out companies that receive the highest ratings from their employees.