Roman Kaplun is cofounder and CEO of Zoolatech, a people-first software development company specializing in high-end software engineering.
The technology outsourcing industry has been a key player in the business landscape for a few decades now. Starting in the mid-’90s, U.S.-based companies began seeking offshore technicians in countries like India, and the technology boom of the late ’90s and early 2000s only drove this demand higher. As technological advancements have continued to develop throughout the 2010s and ’20s, the need for software engineering skills has only grown.
It’s not just technology itself that’s impacting the outsourcing industry, however. External factors have played a huge role as well. The Covid-19 pandemic in particular has had notable effects on the progress of the industry in key ways.
The Covid Pandemic’s Impact On The Outsourcing Industry
As the pandemic touched every corner of the workplace, managers sent their employees home in force. Suddenly, companies that previously struggled with the concept of remote work had to adapt to a fully digital workforce.
The Positive Impact On Outsourcing
In many ways, the pandemic proved that remote culture not only works but works well—and this revelation made it less difficult for outsourcing companies to convince potential customers that outsourcing was a viable option. Remote and offshore work, once unthinkable to some companies, began to take on a new shine.
Not only did the pandemic make remote and offshore work more acceptable, but it also created the financial environment for it to increase. To keep companies afloat during this time, the government indiscriminately printed and handed out stimulus checks. The practical consequence of this choice had differing outcomes for each industry. In other words, a cash infusion for an airline was not the same as a cash infusion for a tech company. While pilots and flight attendants can’t work from home, tech workers certainly can. This means airlines got the cash they needed to hold the line, though many technology companies were suddenly flush with excess cash.
To spend the additional cash, many companies turned to projects that had been on the back burner. With many available and qualified people in the U.S. already working, many sought the additional head count to support these projects offshore. As a result, offshore and remote work was beginning to accelerate.
The Negative Impact On Outsourcing
Of course, the pandemic introduced plenty of challenges to the world of remote work as well. The quick shift forced the outsourcing industry to quickly adapt the technology for cross-border collaboration while maintaining productivity—a monumental effort that introduced its own set of operational and communication- and security-related hurdles.
For example, companies had to navigate the unpredictability of supply chain disruptions, which meant rethinking their offshoring practices and turning instead to more nearshoring or reshoring to try to improve reliability. Plus, with everyone remote, communication and cultural challenges intensified across different time zones and geographical locations, stressing the importance of cross-cultural training. As companies tackled the challenges of transitioning to and scaling for remote work, they had to keep security front-of-mind as well, which comes with its own operational burdens.
Predictions For The Next Decade
The outsourcing industry has been adaptable and resilient in the face of Covid-19 and has even seen major benefits. But what will happen when it encounters the advancements in AI that are coming down the pike?
I predict that in the next 10 years, we’ll see AI shifting the landscape of desired technology skill sets in the U.S., which will in turn give the outsourcing industry new opportunities to contribute. Software engineers and programmers won’t need to do the heavy lifting of coding from scratch anymore; instead, they’ll likely be training the AI models to write it. In this way, I believe the coding work that currently takes up so much of these software engineers’ day will become commoditized and sent offshore so that these engineers onshore are freed up to work on business strategy and analysis.
To successfully navigate the impact that AI will have on technology in the next decade, tech companies should focus on upskilling. They should invest in training for employees to stay ahead of advancements in AI, data analytics and cybersecurity, and they should hire for the future. By prioritizing hiring experts in AI and related fields, companies can better ensure that they can meet their own innovation goals.
As they confront the challenges and opportunities of AI, companies must also focus on transparency, addressing any ethical concerns and complying with regulations around data privacy and AI use. Integrating AI without displacing jobs requires strategies that enhance human work rather than replace it, and it will be in companies’ best interest to start tackling this challenge now.
Conclusion
When Covid hit, no one knew what the long-term consequences would be for the technology ecosystem as a whole, but the outsourcing industry had flexibility and adaptability on its side. Now that we’re a few years out from the worst of it, we can look back and see how the outsourcing industry proved its resilience in the face of the atypical circumstances of a pandemic. It has another opportunity to do it again, as the new frontier of AI beckons us forward. If the past is any indication, I believe the future of the outsourcing industry is bright.
Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?
