Cloud vs Offshore: Far from Either-Or, Gartner Says

There are two main ways to outsource. The first has been around for decades and is sometimes called offshoring, much of which has traditionally gone to India.

The more recent approach is the cloud.

If you thought the cloud was going to do away with offshoring, think again, Gartner argues.

A recent piece in Biztech2.com analyzed these issues and sees offshoring and the cloud as entirely complimentary.

“While the increased use of industrialized services will reduce the volume of traditional and customized services, the impact on offshore providers will be counterbalanced by new revenue from investments in cloud-based services, said Gartner, Inc. However, service providers that are slow, unable or unwilling to invest in the shift to the cloud will risk hampering offshore services revenue growth,” Biztech2 reported.

The move to the cloud will lead offshore providers to change their approaches, not competing with the cloud but instead adding value.

“Cloud-based services will not replace offshore services, but will complement them,” said Ian Marriott, research vice president at Gartner. “In addition, cloud services will not 'make or break' all offshore providers. There will always be a need for "pure-play" providers that operate a labor-intensive delivery approach. But, for broad-based offshore providers that operate in multiple geographies, industries and service lines, and who seek to compete for significant 'wallet share' in major accounts, strategic investments in cloud-based services are mandatory.”

If the offshore provider doesn’t adapt they may well go under. According to Gartner, providers from India are growing more slowly than in the past, but is still clocking in with a nearly 13% growth rate last year.

“The consequence to offshore providers of not responding to such significant market changes will be the deterioration of market share, acquisition by another provider, or its disappearance from the offshore services landscape,” Marriott concluded.


Edited by Alisen Downey