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Outsourcing’s new role in digital transformations

Information technology partnerships are delivering competitive advantages for future-looking enterprises of all sizes. 

These days, every company needs to master technology—and enterprises across the globe are meeting the moment by embracing innovation. From tractor manufacturers to grocery sellers, successful companies are implementing digital strategies and emerging technologies to improve everything from online ordering to cybersecurity.

As the rate of this digital transformation has accelerated, businesses have also found themselves facing pressure to optimize customer-facing tech and the infrastructure that supports it. Unsurprisingly, companies are increasingly regarding digitalization as a key aspect of resiliency, according to Everest Group’s “Recalibrating for Resiliency: 2021 Key Issues in Global Sourcing, Enterprise IT Perspective” survey.

To gain a digital edge and plan for the long term, companies are partnering with technology providers that offer end-to-end services and hundreds of essential tech skills in a single place—allowing businesses to pivot to meet their customers’ needs faster, more efficiently, and at scale.

IT outsourcing is front and center

Integrating information technology (IT) into a company’s core business is a clear way to gain competitive advantages, as IT considerations help drive decision-making about which markets to pursue and which services to offer. But when IT becomes central to that degree, companies quickly find that their ability to execute is only as strong as their IT capacity. That means there is a new role for IT specialty firms that support companies as they embark on urgent digital transformations, especially with regards to demand for cloud solutions, cybersecurity, analytics, artificial intelligence, and robotic process automation.

“Technology is what really drove any growth that’s happened during the pandemic in the outsourcing sector,” says Debi Hamill, CEO of IAOP (International Association of Outsourcing Professionals). This is confirmed by research from CGI, a global IT and business consulting services firm based in Montreal with 400 locations worldwide serving more than 5,500 clients that take advantage of its end-to-end services. As part of its annual Voice of Our Clients Program, the company met earlier this year with 1,700 business and IT leaders who confirm that their appetite for managed services continues to increase year-over-year by 5% to 7%, depending upon their economic sector.

In this environment, partnerships that extend a client firm’s in-house IT capacity are proving more valuable than ever. In fact, IT partnerships are so integral to businesses that they could be called managed services, says George D. Schindler, president and CEO of CGI. Schindler views these partners not as “outside” the client’s control but as an extension of in-house business and IT teams. In addition to bringing technical know-how, these firms bring transferable insights from their experience in other situations.

“A good outsourcing partner is bringing ideas from others—best in class in your own industry and best in class from other industries,” says Schindler. “This is why we refer to outsourcing as managed services. Rather than taking something out of the client’s organization, we are an extension of their team, managing the complex makeup of their technology and business processes, systems, and software to help optimize operations and drive forward business and IT priorities.”

And with the stakes being so high, companies aren’t taking any chances. For one large financial services company in Europe, this meant expanding its CGI contract to encompass analytics while also enhancing app experiences for customers and employees alike. IT is now woven seamlessly into the company’s ongoing business transformation plan.

A deep integration

Despite a clear need for outsourced solutions and expertise, as clients adjust to a post-pandemic world, they’re procuring more services from fewer providers. Thirty percent of companies are consolidating their service provider portfolios in 2021, according to the Everest Group survey, up from 19% last year. That means outsourcing partners must now play a critical role across their clients’ business modeling, strategic planning, and execution.

“In the beginning, outsourcing was all about cost-cutting, but it’s not about that at all anymore,” says Hamill. “It’s about: ‘I want to expand. I want to be number one in my area. The best way to do that is to work with a partner who can help me do it faster, better, smarter. How can they help me take advantage of the technology that’s out there?’”

The best-positioned companies already have existing, scalable IT partnerships in place, says Schindler. Hamill adds that recent outsourcing contracts have added flexibility, which enables partners to spot and take advantage of new opportunities together. For example, consider how a large retailer was able to turn a crisis into a windfall. One month after the COVID-19 pandemic was declared, the company’s online orders shot up by 60%. Undaunted by the sudden surge, the company added 4 million new customers by drawing on its longstanding partnership with CGI.

“We’ve been working with this retailer for more than 10 years, supporting its e-commerce operations across its entire value chain, from back office to front office. They were able to ramp up capacity quickly and introduce new services thanks to having the right operating models and technology in place,” says Schindler. “That doesn’t happen if you’re not already working together.”

All the more reason to make 2021 the year your business establishes a leading-edge transformational partnership—if it hasn’t done so already.