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Cloud Computing: Is it a Threat to Outsourcing?


Outsourcing has long been a popular option for companies looking to take the complexity out of managing IT infrastructure or back office tasks. Businesses rely heavily on outsourcing as it offers an affordable way of managing non-core tasks efficiently and on time. Cloud computing has changed the scenario. For instance, businesses are looking for IT services can contact a service provider that offers software as a service and get instant access to robust cloud-based capabilities in areas such as sales, Customer Relationship Management (CRM) and finance by providing just a credit card number. The big question that is being asked is – will cloud computing make the outsourcing model obsolete? No, say experts. However, the role of outsourcing has been redefined as business services become more complex.
Cloud Computing
A 2013 survey by CDW on 1,242 IT professionals found that end users’ experience with consumer cloud services is increasing the rate of organizations’ cloud adoption. For instance, 73% of IT professionals said that employees’ personal use of cloud apps/mobile devices has significantly influenced their organization’s decision to implement cloud computing. The technology of cloud computing is rapidly growing in popularity especially among small and medium-level business enterprises.

What is cloud computing? It simply means a platform that allows you to access web-based services and applications. So if you are a big corporation and you need to provide all your employees with certain software applications to do their tasks, partnering with a cloud-based IT service provider makes this easy. All your workers have to do is to log into the Web-based service provider’s platform which hosts all the programs they need to do perform their jobs.

Why is cloud computing services so popular? The answer to this question is well explained by a survey conducted by HfS Research and the London School of Economics Outsourcing Unit which covered 628 enterprises. Business executives gave the following reasons as to why the cloud-based model appealed to them:

  • Cloud computing lowers the overall costs of running business applications
  • Quicker implementation of business applications
  • Easier availability of best-in-class applications
  • Facilitates a virtual/distributed organization
  • Allows focus on core activities rather than IT functions

Other advantages of cloud computing include:

  • Allows increased mobility as documents can be accessed from any device and from any part of the world
  • As a personal computer and interface software is enough to access the service, the hardware and software requirements at user side are decreased to a great extent
  • With cloud computing, IT professionals can enhance reliability. They can be part of BYOD (bring your own device) revolution for better productivity.
  • Increases storage space
  • It is possible to implement cloud computing in a limited period of time. All that is needed to start up the application is setting a password and selecting devices to connect to the network.

However, cloud computing is without pitfalls. Security issues may arise as users from different parts of the world access the same cloud platform. Unauthorized users might hack and access private information. Moreover, cloud computing services are not applicable in areas where Internet access is not widespread.

The shift to cloud computing can be far more complex than it seems. Organizations are well aware that technological evolution requires the development of new business models too. The cloud is far less mature than outsourcing, which has been going on for decades. Moreover, given the challenges that businesses face with cloud computing services, professional BPO companies will now have a new role to play. They will have to shift to a value-added approach, providing organizations with advice on how to design their business models based on multiple service providers and make the best use of these interactions.

About Rajeev R

Rajeev R

Manages the day-to-day operations of MOS from NY. With an interest in information technology, Rajeev has guided MOS to extensive use of digital technology and the internet that benefits MOS as well as MOS clients.