For some time now, businesses globally have been shifting their IT work to outsourced providers. A healthcare or finance firm would probably prefer to focus their attention on building a competitive service than on developing their own software in-house. It’s better to hand off the work to pros on the outside than completely reinvent the wheel on one’s own.
But the IT outsourcing industry has itself been experiencing some pretty rapid changes as of late. Before, businesses only needed to ask themselves whether they wanted to outsource their IT services or not. Now, the advent of cloud computing and the ever growing menu of options it brings with it are making the decision much more involved.
Traditional IT outsourcing brings a number of very tangible offerings we’re all familiar with seeing. Servers, data centres, lines of code, and billable hours are all available for the business to purchase. Third party vendors hammer out the details of the contract with clients and partnerships are usually long-term.
Cloud computing, on the other hand, is much more agile and comes asset-free. In an age where internet connectivity has become ubiquitous, companies can now purchase anything from infrastructure to software using a service model (dubbed as-a-service). Companies like Amazon Web Services and Microsoft Azure are becoming the providers of infrastructure for an increasing number of businesses. Meanwhile, Workday, Salesforce, and ServiceNow are doing the same for software.
Cloud services now account for a third of the IT outsourcing market - nearly double what it was in early 2014, according to Information Services Group (ISG). They also predict as-a-service growth “remaining on a steep, upward trajectory” into the future.
One of the greatest benefits to businesses in cloud computing isn’t just that it can shrink costs. The services also have the potential to deliver business process services, a hugely valuable proposition for any business.
On the other hand, cloud computing comes with its own set of challenges and you can’t count traditional IT outsourcing out for the count yet. Businesses must weigh the security risks by asking the question of whether they want to go with the public cloud - a shared computing environment - or private cloud - where the hardware, network, and storage is dedicated to one client. Then there’s the question of how they integrate the services into their particular IT environment.
In many cases, companies might find that moving to a completely cloud-based service can’t meet all of their business needs. More often, a range of solutions using both cloud services and legacy systems ends up being the most viable option all around.

About the author

Kelly Paik is a freelance writer covering science and technology. She hails from San Francisco where she spent some time in the trenches of Silicon Valley, from where she brings that inside perspective as she serves the latest on innovations and updates in the tech industry.