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Nadhan's Top 5 Cloud Computing aftershocks in the world of IT Outsourcing

Disruptive innovation is infiltrating the traditional world of IT outsourcing and customers have several options that they did not have before. Outsourcing providers who plan to "sit back, relax and enjoy the ride" -- or so, they thought -- must get up and be ready to compete with renewed vigor. Cost is no longer a differentiator because it is being diluted by the onset of cloud computing-based options.

Given the pervasive nature of cloud computing, the IT outsourcing world is in for a few aftershocks. I have listed below the key fault-lines that come to my mind as it relates to outsourcing and cloud computing:

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Just-in-time alternatives. Customers will be able to benefit from a distributed set of cost-effective services from different providers for compute, network or storage -- just when they need it. The turnaround time for benefiting from these services is ridiculously low – usually taking less time than it would take to put a traditional contract in place. Just like the consumer behavior has undergone a transformation from brick-and-mortar to Internet-based online purchases over the years, enterprises will undergo a similar transformation in the world of IT outsourcing.


Balanced migration. Outsourcing providers will have to introduce a healthy dose of cloud computing alternatives within their solutions. They must bake into their solutions the very services their customers are looking to procure. Outsourcers have to analyze and determine the right applications for migration to the cloud. Typically, these are their non-core applications.


New breed of consultants. Outsourcers will drive a partnership with their customers in a trusted advisor role where they can provide insight into the applications better suited for the cloud. They will also drive innovation through automation of the select migration processes driven by the market. A whole new pool of consultants will be created specializing in cloud computing migration. They will recommend which application(s) and how?


Contract terms and conditions. The availability of alternatives provides new bargaining chips to customers. Outsourcing contracts will require the service providers (like CIOs)  to have a stipulated amount of cloud computing presence. Contracts will be of significantly shorter duration than they are today -- if there is a contract at all.


Service Provider ecosystem. The emergence of multiple options for services will require outsourcing providers to co-exist with this emerging network of providers. While the traditional model is like the sale of an auto or a house between a buyer and seller, the new model is like the stock market full of traders where the traditional seller (outsourcer) is one among a sea of sellers.


Fundamentally, IT outsourcing is still the same. However, the manner in which the outsourcing services can be availed and provisioned has undergone a foundational shift. Cloud computing will result in a steady rationalization of the outsourcing market. Outsourcers who change their operating model dynamically are likely to survive long term.


Thus, cloud computing impacts outsourcing both from the viewpoint of the consumer and provider. Who are you and how have you been impacted? I would be very interested to know.


For more information about HP, cloud computing and IT outsourcing, check out these resources:

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