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Will SOA and Cloud Shatter the Outsourcing Market as We Know It?

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Joe McKendrickWill SOA and cloud shatter the outsourcing market as we know it?

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  • As enterprises adopt service-oriented architecture principals and practices, and thus achieve greater capabilities to leverage cloud-based services, outsourcing may become an easier, more manageable option.

    SOA -- and by extension, cloud -- is shattering the outsourcing market, but also increasing its size and scope. There are three reasons outsourcing will grow as a result:

    1) Busy IT shops — especially those with large enterprise systems — may not have enough human resources to effectively deploy SOA-aware systems. IT managers, analysts, and architects will need to become business analysts, and spend a good deal of their time working with business units. They will either turn to third party firms either for assistance with SOA, or to take on IT-centric tasks to free up IT to better pursue SOA.

    2) Infrastructures based on SOA principles will lower the barrier of entry for outsourcing providers, which will in turn multiply their numbers, heightening competition and lowering prices. This will energize the outsourcing market.

    3) The growing standardization and "hot-swappability" of SOA-aware components makes it easier to outsource — often as cloud-based services — pieces of the IT infrastructure. This may make outsourcing less of the onerous either/or business decision it has been, as chunks of applications or services can be outsourced or brought in house as the situation fits, with minimal disruption to IT operations and priorities. As a result, we'll see more "micro-outsourcing" and less big-ticket-turn-the-whole-operation-over types of deals.

  • Why, is there a chemical reaction from mixing SOA and Cloud that creates leprechauns and elfs that will do the work instead?

    Ask silly questions get silly answers! GIGO!

  • No, but SOA and the Cloud will increase the effectiveness (what we do) and efficiency (who well we do it) of the outsourcing market. Unfortunately, the global outsourcing market is principally about labor arbitrage (aka, getting more resources for less money). While there are a few companies out there that recognized the degenerative nature of this relationship, few are doing anything about it. As such, the model of treating people as a commodity rather than a asset will continue for some time.

  • I would think the opposite would be true. After all, aren't IaaS, PaaS, and SaaS all types of "outsourcing"?

    But this is just me and my simple mind :).

  • I think that both @Joe and @Jerry make good points. SOA and Cloud should be enabling technologies for greater use of globally distributed development and by extension outsourcing. But it requires a change in the philosophy, maturity and traditional roles by both the company and the provider.

    But in line with Jon Stewart's (of Daily Show fame) "Million Moderate March", I say let's take the verbiage down a notch here too. These technologies are not shattering anything. "Transform" and "evolve" may be better words to use. Jerry rightly points out that too many providers (and I think companies who are/may outsource) are keeping their heads in the sand and following SOP as long as they possibly can. Change is uncomfortable so we choose to put it off as long as possible. Only those that keep keep their heads in the sand the longest will be "shattered".

  • I completely agree with Jerry. Technological advances (like SOA and the Cloud) can only make outsourcing more effective and efficient.

    And this is not really about fair flat-world competition, it's about unfair competition based on labor arbitrage, as Jerry stated.

    But I seriously doubt that the solution is going to come from companies recognizing that outsourcing is undermining the whole national technology base and, eventually, the very same businesses that currently benefit from outsourcing. Companies management is greedy and only looking a few months ahead. The only solution, in my mind, is government regulations (which I also doubt will come any time soon, given the self interest and widespread lobbying characterizing our political system).

  • There already are protectionist measures under talks in the US right now, such as the anti-outsourcing bill and tax breaks, etc. But whether these measures will have direct impact on the national technology base, or how US firms view their providers, remains to be seen.

  • Do any of you actually work at a company where SOA is in place and it is working as was described for all these years? We are going through a painful SOA install at our company and I can not see the ROI on it. We have spent millions of dollars for fancy hardware and software and now it takes several 250.00 per hour consultants to help write these transforms between applications that were never designed to use this method for interfacing with other systems. I am talking about new software for smart grid systems, not antiquated old software that has been on the market for years. This is nothing more than the industry rebranding middleware with a new fancy term, coming up with new expensive hardware and software and a bunch of hearsay about what it's going to do for you when it's done. We have had several other methods of doing the majority of what SOA supposedly does for many years. Now we are stuck with additional costs, additional overhead and nothing to show but hurting our internal customers because our IT focus is now on things behind the scenes that the customers don't care about. The company executives are not interested in hiring additional full time resources for something like this. so we end up taking away precious IT people resources from taking care of our customers needs in other areas such as automating manual processes, reducing the need for additional people by converting things they were doing into technology driven solutions, supporting existing systems, etc. and sending our developers to work behind the scenes on transforms for interfaces between systems. Oh but SOA and ESB is going to be able to tell us when there is a problem with one of our interfaces. Big deal. The fact is, we have other ways of doing that and could have done that all along but chose not to because we didn't feel it was necessary to spend that much time and effort on watching interfaces that once completed run fine with little to no problem afterward.
    When is someone going to wake up and move on to the next new technology or rebranding of an old technology that is going to recreate new business for tons of software and hardware vendors, consultants and industry technology writers and theorists to make more money on?

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    Well, I have a different point of view. Cloud computing may have a serious negative impact on traditional outsourcing body shops (shops that have commoditized outsourcing). With the rise in the adoption of cloud computing, there will be a greater requirement for resources who understand business and can overlay processes on the cloud services that are offered. Cloud computing architecture strategy will be, more often than not, owned in-house by organizations. The set up and testing piece will become simpler as we progress. This will diminish the footprint of outsourcing body shops.

    Unless, these organizations evolve to the next level and start to offer these services either by means of paas or bass, or have a resource base with strong domain capabilities, their survival will be in question. Outsourcing shops need to evolve a differentiated strategy in this space or else their play will be limited significantly in time.

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