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
CBRE report: Romania, among the main destinations for outsourcing investments in Europe

Romania is among the main destinations for the Business Services Sector, which looks for well qualified staff, employment cost savings and good quality office space, according to CBRE's Business Services Destin

 Read Full article »
Vodafone Romania and ASE Bucharest opened new IT laboratory in University's building

Vodafone Romania and the Bucharest University of Economic Studies inaugurate the new IT laboratory located in "Virgil Madgearu" building on Calea Dorobanti, finalized through a renovation and modernization proj

 Read Full article »
CTP is launching a project for the workforce market in the areas near its parks in Western Bucharest

CTP, the leading premium industrial parks developer and long-term manager in Romania and Central and Eastern Europe, is starting a social responsibility program that aims to facilitate a series of meetings betw

 Read Full article »
AI, the "performance engine" in Romania's business service industry

ABSL (the Association of Business Service Leaders in Romania) debated during its annual conference the future of the business service industry in our country and AI's influence in this sector's performances.

 Read Full article »
JLL Bucharest City Report: Industrial, logistics and offices were the drivers of the Romanian real estate development market

The industrial, logistics and office sectors in Bucharest were the drivers of the real estate development market in the first nine months of the year, while the retail sector recorded the lowest growth rate in

 Read Full article »
Microsoft extends partnership with Romania's Bitdefender to global level

Microsoft has extended its partnership with Romanian cybersecurity and anti-virus software company Bitdefender to a global level, Gabriela Matei, General Manager, Microsoft Romania announced at the 2017 Microso

 Read Full article »
Certent opens new office in Bucharest

Certent, Inc., a leading provider of software-as-a-service (SaaS) solutions for equity compensation and financial disclosure management today announced the opening of a new office in Bucharest, Romania.

 Read Full article »
Companies leased 45,000 sqm of office space in Q3 IT and outsourcing players – the main drivers of demand

The Bucharest office market saw a net take-up of close to 45,000 sqm in this year's third quarter. According to data from the real estate consultancy company Colliers International, the demand came mostly from

 Read Full article »
ABSL: The negative Impact of EO draft will lead to decrease of FDI and employment rate

ABSL Romania examined the emergency ordinance draft to amend the law no. 227/2015 regarding the Fiscal Code and concluded that the implementation of these measures will have a negative impact on Romania's inter

 Read Full article »
Farlei Kothe becomes EMEA vice president at Stefanini

In two years, he built a team of 200 people from scratch and made us 20 million US dollars revenues.. For the last nine years, he's been with us – first as the manager for our application development centre a

 Read Full article »
 
MOST RECENT VIDEO
 
 
MOST READ ARTICLES
» ROMANIAN OUTSOURCING AWARDS FOR EXCELL...
» Gartner: Romania moved into the first ...
» ABSL: BRD First Tech challenge in Roma...
» Molson Coors started to grow its busin...
» Roxana Tesiu appointed as the new Vice...
» Vastint Romania celebrated the opening...
» Healthcare IT outsourcing market is ex...
» Exclusive OT print issue: Genpact may ...
» Manpower:Romania has world's third hig...
» ManpowerGroup launches ManpowerGroup S...
 
EDITOR CHOICE
Telus International Europe: Discover how successful smart-home providers deliver exceptional customer service

Key Takeaways

• Internet of Things (IoT) connected home devices are making the contact center and customer service more important than ever. • A friendly approach and positive attitude are import

 Read Full article »
Societe Generale European Business Services support the IT education in Romania through a partnership with ACADEMY+PLUS

Societe Generale European Business Services (SG EBS), part of Societe Generale Group announces a partnership with ACADEMY+PLUS, a revolutionary coding school, tuition free, opened this year in Bucharest.

 Read Full article »
TELUS International Europe: The convergence of customer service and digital marketing/NewGen technologies: What does it mean for businesses?

Technology shapes the way we educate, communicate, conduct business and advance science, all while maintaining significant influence on the global economy. But the way we engage with technology is changing

 Read Full article »
Stay updated on People in Shared Services and Outsourcing Forum, October 19

Outsourcing Today organizes the third edition of People in Shared Services and Outsourcing Forum, on October 19, 2017 in Bucharest at Caro Hotel.

 Read Full article »
Preparing for the new future

Business shared services in Romania is by nature a flexible, mobile and diverse community and in this context, local markets develop their own particularities to address the global changes, to adjust to new dem

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