Now, businesses seek a competitive edge and disruptive technologies rather than cheap services. They understand the importance of embracing innovative solutions for sustainable growth and profit.
There’s good news for software development outsourcing companies: the demand for IT talent will rise as businesses plan to outsource a lot more in 2019–2020, according to Jeremy Coward of the National Outsourcing Association. But while companies previously took advantage of outsourcing instead of hiring experts in-house for cost optimization, this reason is not at the top of the list today.
What does it mean for software development outsourcing companies?
Broad expertise in technology is no longer enough to be a leading IT outsourcing service provider. Businesses are starting to pay more attention to companies with a specific focus. With lots of software development companies on the market, industry-focused service providers will stand out.
Traditional service models like team extension, where an outsourcing company provides an office and equips a workplace, covers all the paperwork, and manages and coordinates project processes have become a commodity. Companies need to focus on value-added services and the specific needs of industries in which they have the most experience.
How to add value to IT outsourcing services
To remain competitive in today’s economy, service providers should start targeting vertical markets instead of focusing on a horizontal approach.
While a horizontal approach means focusing on particular technologies and solutions, a vertical focus is more business-centric — it aligns with a client’s business strategies and tackles emerging industry challenges. As some industries are growing faster and tend to outsource their IT needs more than others, service providers may choose trending verticals and develop expertise accordingly.
Take the top IT outsourcing companies of Ukraine: Intellias, ELEKS, and SoftServe. Each has carved out several successful niches and delivers solutions to clients from only a few industries. For example, Intellias sees automotive as one of the most promising verticals today. They invest in automotive R&D, accumulate expertise in the field, and attend world-renowned conferences like CES 2019.
Today, automotive and FinTech are two of the fields most ripe for disruption. There’s also a lot of investment coming to innovate such areas as consumer commerce, retail, and energy management. So IT outsourcing providers should pay attention to these fields. Approaching the fastest-growing markets is a proven strategy for how service providers can maximize the benefits of an industry focus.
Achieving vertical excellence
Transforming business strategies is always challenging. The same applies to transferring from horizontal to vertical outsourcing. Here are some recommendations on how to execute a vertical delivery model painlessly.
- Review your existing customer base. Your current portfolio may already have several clients from a specific industry. Even one prominent client from a particular field can be a huge asset.
- Target specific markets. Transform your marketing and sales activities to create a new message that will target the right industries.
- Develop industry expertise. Attending industry events, conferences, and meetups is a must. You’ll be the first to know the industry trends and pain points as well as establish a powerful network.
- Never stop learning. Research, learn industry media, ask experts — be the first to grab all the industry trends.
Vertical integrated outsourcing as the way to stand out
Businesses that outsource IT services expect more than technological support and inexpensive labor. They consider outsourcing as a strategic partnership with a powerful tech company that will help them grow globally and reach business objectives. Such cooperation is a win-win strategy for both parties, as a client’s business develops with a unique value-added focus while the service provider gets a long-term relationship instead of part-time software development projects. To become a value-added partner for organizations, IT outsourcing vendors must stand out and offer a unique approach to solving business challenges. Verticalization is a proven way for outsourcing providers to differentiate themselves from thousands of similar software development companies. A vertical focus allows companies to succeed and become powerful players in the global IT market.