Latest News  

Cloud and APIs change the outsourcing as we know it

As traditional software outsourcing evolves, cloud service management brings new challenges for organizations.

2016-01-07 15:05:02

Outsourcing isn't what it used to be. In April 2015, KPMG's quarterly survey of outsourcing buyers, advisors, and service providers found declining demand for third-party services. In July, The Wall Street Journal reported that outsourcing deals in India declined last year to $120.4 billion from $206.8 billion in 2010, writes informationweek.com.

In a report published over the summer, Forrester Research said, "Outsourcing has turned from being a racehorse to a plow horse." Demand for cloud services, the firm said, has eroded demand for infrastructure outsourcing. Application and application management outsourcing appear to be doing better, according to the Forrester report, but their respective rates of growth are less than they were in recent years.

Yegor Bugayenko, CTO of Teamed.io, a firm that manages outsourced software development, argues that traditional software outsourcing doesn't work anymore. Bugayenko contends that the traditional method of developing software through an outsourcing company that manages a team of developers produces poor results.

"We're trying to create a new model by developing software in distributed teams," said Bugayenko in a phone interview, "where people are not co-located. [...] They work remotely and each individual is working from his or her own place."

Teamed.io has more than 60 programmers on call. "We're trying to show everyone how software development without offices and without meetings can be very effective [in terms of quality and cost]," Bugayenko said.

Teamed.io works in conjunction with Upwork, the online outsourcing management service formed from the combination of oDesk and Elance, to find, recruit, and pay programmers. Upwork provides a platform for coordinating labor, but it doesn't offer much in the way of oversight capabilities. That's where Teamed.io comes in.

"The way we manage this work is very different," said Bugayenko. "We are micro-task managers. We break down the big problem, which we're solving for the customer, into small pieces. And then we give these small tasks to a large number of people, sometimes 20 or 25 of them. Then our managers and our software enable the management of these micro-tasks, to make sure quality is high and the milestones are in place."

Bugayenko is not a disinterested party here, but he claims his distributed approach produces better results than traditional outsourcing. "We have clients who are working with us and with traditional outsourcing as well, and they tell us that the difference is huge," he said.

Adolfo Masini, partner and senior VP at Neo Group, an outsourcing consultancy, argues that focus matters more than the proximity of the team. "One option is to manage a global program from a single location with multiple functions reporting into the program lead from different parts of the world," he said in an email. "Or you can do the best you can to give the responsibility of the overall program to a team that is located in one location or few locations. I found regardless of the technology you have to stay connected, the more focussed and collocated the team is to one another, the better the outcome."

David J. Brown, global lead of KPMG's shared service and outsourcing advisory in the US, in a phone interview acknowledged that software outsourcing is declining overall, but noted that the changing nature of technology has shifted where developer resources are needed.

Large enterprise resource planning (ERP) systems from the likes of SAP and Oracle that required armies of developers for customization and maintenance have fallen out of favor. In their place, cloud-based systems like SAP Hana and Oracle Fusion, among many other entrants, have gained popularity.

While cloud-based systems have reduced the complexity of internal IT in terms of customization and maintenance, the growing number of these systems, the need to integrate niche offerings with other applications, and the ease with which cloud software vendors can be abandoned for rivals have all added a different sort of complexity back into the mix, said Brown.
"Clients struggle with service management aspects of the outsourcing marketplace," said Brown.
Brown said that the practice of breaking software development tasks down into digestible pieces has already been adopted among enterprises through the agile development methodology. He said he hadn't heard of it being taken to the granular level described by Bugayenko, but noted that problem-solving through atomization can be seen in the way companies have implemented centers of excellence to address IT internally, rather than through outside vendors.

Though cloud computing changes may affect the need for custom software, they don't necessarily obviate the need for IT skills. "Cloud services can't replace quality talent," said Masini. "If you have the talent inhouse, then you should be able to take advantage of cloud services. Otherwise you still need to go and get the talent from the global pool of talent to execute the development program -- cloud computing or not."

One of the developments transforming outsourcing is the growing ease with which applications and services can be connected through composable APIs. In this model of modularity, business applications have the potential to be plug-and-play with one another, even if reality is seldom that simple.

Emmanuel Straschnov, cofounder of Bubble, a visual framework for creating applications without coding, in a phone interview described the situation as the "API-ization of everything."

Straschnov said the problem with software outsourcing is that the people who build the software are not the people who end up using it -- so the users don't get what they expect.
"For something as essential software, you need to be in full control," he said.


0 COMMENTS ^ Go back to Top
WRITE A COMMENT ^ Go back to Top
 
Your email address will not be published.
Nickname
Email
Comment
Validation Code
   
 
 
NEWS
SAP becomes first European tech company to create ethics Advisory Panel for Artificial Intelligence

SAP announced its guiding principles for artificial intelligence (AI) and its creation of an external AI ethics advisory panel – the first European technology company to do so. The panel, comprised of experts

 Read Full article »
DB Global Technology marks five years of activity in Romania

DB Global Technology, Deutsche Bank's technology center in Bucharest, celebrates five years of activity in Romania, the company announced.

 Read Full article »
US giant Apple officially registers company in Romania

American technology producer Apple officially registered a company in Romania, Apple Sales Romania SRL, controlled by Apple Distribution International and Apple Sales, both companies being registered in Ireland

 Read Full article »
Oracle Corporation registers 9.2 billion USD in revenues for 2019's first quarter

Oracle Corporation announced fiscal 2019 Q1 results, with total revenues of 9.2 billion USD, up 1 per cent in U.S. dollars and up 2 per cent in constant currency, compared to Q1 last year.

 Read Full article »
UiPath raises 225 million USD Series C Led by CapitalG and Sequoia

UiPath, the leading Enterprise Robotic Process Automation (RPA) software company, has closed its series C funding raising 225 million USD at a valuation of 3 billion USD. The round was co-led by existing inves

 Read Full article »
Xerox launched sales and marketing program for its partners

Xerox has launched in Romania the Xerox Global Partner Program to help its partners diversify their sources of profit and strengthen their customer relationships in the context of the growth of small and medium

 Read Full article »
Local IT services and software market marks under expectations growth in 2017, ANIS says

Domestic software and IT services market in 2017 rose only 2.1 per cent over the previous year to reach 975 million Euro, a growth rate under expectations, according to the most recent study conducted by ANIS s

 Read Full article »
Bitdefender secured direct presence in Australia by taking over local peer SMS eTech

Romanian security technology company Bitdefender said on September 11 it has acquired Australian peer SMS eTech, as part of its strategy of globally expanding in the consumer and enterprise segments.

 Read Full article »
Romanian employers forecast the strongest hiring pace in more than ten years

Fourth-quarter hiring plans are the most optimistic in Europe, on a par with Slovenia, and among the top 5 most optimistic globally, according to ManpowerGroup Employment Outlook Survey for the October – Dece

 Read Full article »
Oracle Academy expands offering with personalized learning resources and AI curriculum

Oracle Academy announced new curriculum offerings and learning modules to advance computing education globally.

 Read Full article »
 
 
MOST READ ARTICLES
» ROMANIAN OUTSOURCING AWARDS FOR EXCELL...
» Molson Coors started to grow its busin...
» French energy operator Total opened su...
» Capgemini to open new office at Suceav...
» Leoni to open new SSC in Cluj, cut job...
» The Outsourcing industry announces its...
» Luxoft expands Asia Pacific presence w...
» Genpact's COO: Staying ahead of the cu...
» Olga Botusan, Stefanini: There is a hu...
» LeasePlan to open service center in Bu...
 
EDITOR CHOICE
Vivek Bakshi, keynote speaker at People in Shared Services & Outsourcing Forum on October 18, at Bucharest

As a GM for the European Delivery Centers (Romania and Poland international locations) tasked with leading the growth and profitability of one of the most dynamic industries with a focus on customer service is

 Read Full article »
Tom Hobson, at People in Shared Services & Outsourcing Forum on October 18, at Bucharest

People in Shared Services & Outsourcing Forum brings in new top speakers starting with the Global Operations & Business Transformation Executive Tom Hobson, GM of ADP Romania.

 Read Full article »
People in Shared Services and Outsourcing Forum takes place on October 18th in Bucharest

Outsourcing Today, the integrated communication platform of for the business services sector, together with The Diplomat-Bucharest, kick off the autumn series of events on October 18, at Caro Hotel Bucharest, w

 Read Full article »
The outsourcing industry needs early and better educated graduates

In terms of development of business shared industry in Romania, the industry might face a need of doubling the current pool of employees, estimated now at roughly over 120.000 people, according to number estima

 Read Full article »
Francesca Postolache, PwC: In the digitally transformed work and living environment, it is essential to keep up with the present and future

It is important to educate and develop ourselves, in the digitally transformed work and living environment and to keep up with the present and future. We need to develop the ability to adapt for the future, say

 Read Full article »
Latest News  
 
about us | newsletter | contact | members area | GDPR policy
Copyright © 2015 by Diplomat Media Events Design by Diplomat Media Events