Outsourcing became an emerging trend in the late 1980s/early 1990s. In the subsequent 30 years, it became a strategic business imperative for businesses in the USA and Europe. In the 1990s, outsourcing consisted of hardware and networking-related work. However, in the internet era of the late 90s and heavy digitalization of industries in the early 2000s, outsourcing started taking a more evident shape. Business process outsourcing, software development, and full-fledged IT function outsourcing gained rapid pace during this period. The business of outsourcing became more client-oriented and just not an internal business process anymore.

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* Evolution of IT outsourcing

2. Outsourcing became an emerging trend in the late 1980s/early
1990s. In the subsequent 30 years, it became a strategic
business imperative for businesses in the USA and Europe.
In the 1990s, outsourcing consisted of hardware and networking-
related work. However, in the internet era of the late 90s and
heavy digitalization of industries in the early 2000s, outsourcing
started taking a more evident shape. Business process
outsourcing, software development, and full-fledged IT function
outsourcing gained rapid pace during this period. The business of
outsourcing became more client-oriented and just not an
internal business process anymore.
In 2014, it became vital to keep the IT functions in-house. As the
volume of work for IT specialists increased, businesses felt the
need to retain IT services. During this time, IT outsourcing,
despite its continued growth, was not seen as a strategic choice
anymore. IT outsourcing revenues fell to an estimated $88bn in
2014 from $103bn in 2013. However, with the advent of cloud
computing, higher penetration of mobile technology,

3. Artificial Intelligence, IT outsourcing again became a strategic
option for organizations worldwide. In the post-pandemic world
of 2022 and beyond and with looming geopolitical uncertainties,
IT outsourcing is a pivotal strategic decision for most
organizations, irrespective of their size and industry. Among the
predominant trends of 2022 in the IT outsourcing sector, the
notable one is remote work demand. When comparing the last
decade with the ongoing decade, the demand for remote work
has gone up by at least 159 percent. The establishment and
further expansion of cloud infrastructure and IT solutions have
led to the adoption of remote work environments by employees
and organizations alike. Another trend in 2022 that overlaps with
the remote work scenario for IT outsourcing is cloud computing
solutions. For example, more than 77 percent of present-day
companies use cloud computing services to host their business
apps. From medium to small businesses, nearly every type of
business works with cloud computing services. The use of cloud
computing services helps in better management of outsourcing

4. The IT outsourcing industry is also inclining towards the use of AI
in its processes. AI usage has improved the IT industry processes
and helped in the speedy delivery of outcomes. Companies are
now investing a high amount of money in AI technology and its
applications in the outsourcing sector. The IT industry is
investing so much in the AI sector that the AI technology sector
will reach a valuation of more than 50 billion USD in the next
few years. There is a possibility that many IT companies will
depend on external companies that specialize in AI solutions and
technologies instead of creating their strategies and products
based on AI. This trend will drive the majority of the outsourcing
processes in the IT sector.
When it comes to outsourcing roles and responsibilities inside
the IT industry, the demand for cyber security specialists will go
further up. Cybersecurity is a very necessary element in today’s
IT and data management sector.

5. From organizations to users, everyone wants to use IT solutions
with the backing of cybersecurity strategies. While there is a
rise in the connected devices under the internet of things, there
is also a chance of high vulnerability to cyberthreats and
cyberattacks. In such an imminent situation, the demand for
cybersecurity professionals and third-party cybersecurity firms
for outsourcing in the IT industry.
Organizations to move into the new era, need to have serious
digital capability. In the highly uncertain and dynamic market,
especially in countries like US and EU region hiring, training,
updating, and maintaining in-house IT teams is expensive,
tedious, and poses a business risk. Considering the need to
digitalize and strategic reasoning, IT outsourcing is likely to
continue to grow in the next decade as well.
IT Outsourcing as a strategic advantage
Business uncertainties of post COVID world have made
organizations more conscious about lean and focused strategy

6. The rapidly changing technology landscape has made it very
difficult for organizations to hire and train IT specialists to keep
pace with it. Hence, IT outsourcing provides certain clear
advantages:
Advantages of Outsourcing as a strategy
1. Lean and Focused Organization: Focusing on their core
function helps organizations to keep the bottom line healthy
while improving their market offering. Leaner organizations are
better placed to handle crises
2. Cost saving: IT outsourcing has proven to be a cost saver.
Hidden costs of training and infrastructure in addition to the
higher cost of employment in developed economies act are
offset significantly by outsourcing IT functions. Outsourcing also
saves on the currency of time in bringing in-house talent up to
speed.

7. 3. Continuously updating knowledge of technology: IT
outsourcing firms are always keeping up to date with the latest
technology and providing new solutions. Outsourcing enables
organizations to leverage this knowledge base of IT outsourcing
firms
4. Access to proven talent pool: Outsourcing, especially
offshore outsourcing allows organizations to access a rich global
pool of talent in the latest technologies
However, Outsourcing is not without its disadvantages as well,
primarily of the 2 following kinds:
1. Loss of control: Fear of organizations have been losing
control over the outcome of Outsourced tasks or processes. An
outsourcing firm will have its focus on its bottom line, which
may not be completely aligned to the client and shift according
to times and other clients. The modern IT professional today
expects their workplace to be flexible and allow the option of
working from anywhere to be viable.

8. While most companies have made space for remote work
strategies after the effect of COVID 19, now, most companies are
trying to adopt a hybrid model to exercise a bit more control on
work processes and employee culture. Many companies have
truly shifted to the work from anywhere model. While this has
enabled the employees to find better work-life balance and
maintain productivity, companies are also using fewer resources
than before. However, there is also a possibility that the
management feels a loss of control over how employees work.
2. Security risks in a Work From Anywhere world: In the post-
COVID-19 pandemic world, the new normal to have emerged is
the Work From Anywhere paradigm. The data security risks,
which were already high in the pre-pandemic era, have only
multiplied in the post-pandemic world. Here we try to address
security risks and how IT provides the risks of outsourcing data
security risks.

9. A solution to Loss of Control due to Outsourcing- In the
changing outsourcing landscape, there is a hybrid of solutions
and service providers emerging. As a result, the focus has shifted
from IT outsourcing just for software development to service and
solutions outsourcing. This helps in both the bottom-line
alignment of the client and IT outsourcing firm and increased
engagement of solution providers to the client’s strategic goals.
Solutions can be for organizations as a whole or of modular
nature for solving particular issues. The emerging outsourcing
model is more strategic in comparison to the conventional
model. While there is a chance that team dynamics will be
affected by remote work, the use of virtual technologies for
communication and coordination can keep team dynamics intact
and establish them for a recruit. The clarity of communication
with the help of virtual technologies specially made for team
collaboration improves team dynamics. Although the bonding
between employees and team members may be affected
negatively, cross-learning and skill enhancement with the help of

10. Moreover, the remote work environment can help enhance the
individuality of each employee and improve their problem-
solving skills as they move from a physical workspace to a
remote one.
Here are the most effective solutions for loss of control risk on
an outsourced team.
· Pick a transparent vendor- One of the major ways of
increasing control and transparency in the IT outsourcing process
is to hire a transparent vendor who offers you information on the
outsourced tasks. An IT company should check whether the
vendor has control loss risk mitigation strategies in place and
how far they are implemented in the work process. A
transparent vendor offers a flexible and clear approach to
outsourcing partnerships, reducing the risk of loss of control.

11. Keep the team informed- When the company starts outsourcing,
the process will take time to be fully implemented. The team
working on the project in-house has to know about the
outsourcing remote team and be informed about the many
processes entailed with outsourcing. This will keep the team
involved and reduce the chances of loss of control and
coordination between the in-house team and remote
professional team. The lack of information can otherwise portray
the whole process as a power shift where the remote team faces
hostility and vice versa. When there is enough information, the
remote team integrates well into the existing team to create a
hybrid model of work structure.
Use advanced communication channels- communication
channels are crucial to establishing control and coordination
channels with the outsourced team. Not just information,
created communication channels are necessary to maintain a
steady flow of information, data, and reports between the
existing and outsourced teams.

12. Moving from traditional methods of professional communication
like email, to other advanced communications like calls, video
conferences, digital memos, reminders, and team collaboration
interfaces can help create a balance in the dispersed form of the
IT organization.
· Manage the team from time to time- there will be issues arising
between the existing team and outsourced team and even inside
the outsourced team. However, proper management of the teams
without taking away their freedom of working flexibly can help
mitigate the risk around the loss of control on the outsourced
team. This management can be done by improving communication
and enhancing the pace of communication between the
teammates. When communication is fast and constant, managing
the entire team is easy and there is minimal loss of control.
The key to finding solutions for outsourcing risks like loss of
control is to find a balance between control and flexibility. While
this balance can be precarious to strike, the use of technology
and leadership skills can help reduce the risk.

13. Whether it's recruiting or outsourcing, loss of control can be
replaced with flexibility that improves productivity and outcomes
with the right digital transformation and outsourcing strategy. Most
organizations that are successful in digital transformation have
adopted a very strategic view of outsourcing and which modules to
outsource. The primary areas have emerged as primary areas of
outsourcing in recent times:
a) Migration of legacy setups into cloud technology is a perfect
example and a process almost every organization now faces.
Decision-makers have learned from early mistakes that the “lift and
shift” approach to migration fails to fully leverage the value of the
cloud. Clients also leverage from best practices of outsourcing firms
b) Software development which also includes web and app
development
c) IT project management
d) Complete solutions for IT process outsourcing
e) Testing and Quality Assurance

14. During the COVID-induced lockdown phase in 2020, organizations
rushed in to ensure work continues amidst uncertainty. As a
result, Work From Home became a ubiquitous phenomenon.
However, organizations were not fully prepared for the security
risks that emerged as a result. In the post-pandemic period
organizations have started developing a new hybrid model of
office and work from home. The cost savings and lean
infrastructure management have prompted these changes, as
demonstrated during the lockdown period.
However, working from different locations has brought forward
its own set of challenges. Clients are going to increasingly look
at data and privacy security as a strategic threat and invariably
IT outsourcing firms guaranteeing better security are going to be
preferred in awarding contracts. The lack of traditional security
systems like firewalls, network protocols, etc in work from home
makes it very difficult to protect sensitive data. Some of the
best solutions to solve remote working problems are as follows:

15. a) Home device identification: In a conventional network,
devices are identified and assigned to the network. However, in-
home VPN devices are not assigned to the network and would be
difficult to monitor instead. This does pose a network security
threat. However, device tagging and identification protocols
have been developed and have to be in place for each user to
prevent network breaches.
b) Local disk security and encryption: Disk encryption prevents
users from downloading and distributing users' sensitive
processes and client data.
c) Remote Desktop: Remote desktop services have gained
significant traction in the past 2 years. They go a long way in
mitigating security risks and improving accountability. Improved,
interface and networking have also enabled users to access a
remote desktop seamlessly. Remote desktops are controlled
better by the network security team and prevent local disk
security issues as well.

16. d) Virtual Private Network (VPN): Homes and business networks
can be secured using a secured Virtual Network. Application data
over such a network is encrypted. The network is also
encrypted, making network breaches difficult.
e) Biometric Identification: Next-generation identification tools
like biometrics have enabled higher user security and work
tracking. Biometric identification prevents any unauthorized
access to the system.
f) Protection against Malware: Home networks are open to
malware attacks. Outsourcing organizations have identified
software firewalls and malware software as part of common user
requirements

17. In Conclusion
The unpredictable nature of the COVID-19 crisis threw the whole
world into a new normal. However, during this period certain
business realities like being strategically lean, survival of the
digitalized, and new models of business became crystal clear. As
discussed above, the advantages of IT outsourcing outweigh the
disadvantages. However, it has posed its own set of problems
with work-from-home security – both local and on cloud
networks. However, the industry is well prepared to handle such
risks. Even though it is early years, IT security is a clear strategic
area of focus for IT outsourcing firms
and may prove to be a unique advantage for firms to keep up the
growth trajectory.

18. Content Source: Quora
Contented by: Mindfire Solutions
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