Remember the good old days when people would book a flight ticket on a whim to satiate the desire of an unplanned vacation or casually walk into a crowded restaurant? Well, COVID-19 has given a new meaning to “normal” as businesses of all shapes and sizes look for ways to stay afloat. Digital transformation has emerged as the top choice for most businesses to keep pace with changing trends in a world being driven by social distancing.
- Spending on cloud up: The COVID-19 pandemic is driving digital transformation, which in turn has accelerated technology outsourcing. The uncertainty surrounding the pandemic has made businesses redraw their spending strategies. To manage the transition to remote work and online customer engagement and order fulfillment, many businesses increased spending on the cloud, particularly software as a service.
- Recovery path: Cuts in IT outsourcing expenses due to the pandemic eased from $83 billion in the spring to $31 billion at the end of 2020, said Gunjan Gupta, a principal research analyst at Gartner. “Some of the service providers are reporting even double-digit growth,” she said, adding: “I think the acceleration is going to continue for the rest of 2021 and 2022.”
- Outsourcing suffered a blow: Things weren’t looking bright for IT service providers in the early days of the pandemic. Following travel restrictions, the abrupt decline in incoming projects, and dips in company revenues, businesses were releasing external contractors as an immediate fix to endure the first wave of the crisis. As a result, the global IT outsourcing sector took a heavy blow, reducing value by 5%.
- Tables turned: Once companies recognized the need to deliver a sustainable response to the crisis, the tables have turned again for IT suppliers. IT services’ demand intensified with organizations accelerating digital adoption to bounce back and build resilience to weather future disruptions. The pandemic has actually reinforced the benefits of IT outsourcing.
- Bright future: As companies reset business strategies to ramp up modern tech solutions, they are more likely to use external support to achieve this faster. Research confirms that; 2020 Global Managed Services Report by NTT suggests that 45% of global corporations are planning to outsource more work in the next 18 months.