Do you think cloud computing is latest IT outsourcing model?


Cloud is a utility model for computing capacity, business functionality and software. The organizations, service providers and the outsourcing companies are redefining the way they operate and serve their customers.

The big question: Will the cloud be the latest IT outsourcing model?

Let’s not guess the answer as yes and no but explore some facts by virtue of which cloud computing is compared to IT outsourcing.

It seems that an easy access to cloud computing is a natural evolution of the IT outsourcing services. All you have to do is to provide a credit card number to a cloud computing service provider and access the computing capacity almost immediately. A software-as-a-service provider will grant access to cloud-based capabilities such as sales and finance. Now, do you need a traditional outsourcing partner anymore?

Some kinds of services provided by the cloud are actually as easy as turning on the lights whereas others require professional help leading to different levels of services resulting in a range of providers offering various value propositions at different price points.

Complex IT models and environments

The cloud model means that enterprises have to manage complex, hybrid environment that includes, externally provided cloud services and their own internal systems. Integration points between these two need to be well managed apart from facing several challenges such as security, data integrity and service availability. The integration role played by some outsourcing providers has become all the more important. The technical knowhow and the ability to advise enterprises on the appropriate design of their business models based on multiple service providers is gradually establishing itself. This seems to be the new era of outsourcing—for cloud service providers.

Categories of Outsourcing Services and Providers:

According to a projection, this year will see a lot of companies increasingly relying on the cloud for information processing and business services. Also cloud will be responsible for the emergence of primarily three categories of outsourcing services and providers.

1)      Basic business functionality providers-

The value proposition for this category will focus primarily on efficiency and cost. The essential capabilities of this category are driven by primary concerns pertaining to the availability of services. Some success factors for such providers are 99.999 percent available time, recoverability and security.

2)      Niche business functionality providers-

Outsourcing companies with lot of experience and deep expertise in functions such as sales and customer support, enable them to command a premium for their services. For such functionality providers, the value proposition will be to make sure your company gets a business function configured for your needs.

3)      Aggregator, Integrators and business designers-

This type of outsourcing provider acts as a business design consultants in addition to serving as an aggregator and integrator of critical services. Such a company must have the capability to integrate its own and other services and manage them seamlessly helping its clients become cloud enterprises.


The cloud as a utility model extends the benefits of outsourcing to a range of organizations making it accessible, affordable and quicker to provide. For smaller enterprises the cloud can deliver remarkable results since software-as-a-service applications like Hosted Exchange 2010 and Hosted Sharepoint are more expensive to own by a company than to implement and maintain in the cloud.  IaaS (Infrastructure as a Service) from cloud providers (Virtual Private Server) is a huge competitor to IT outsourcing. Hence it seems that the new cloud environment is most likely to propel outsourcers and integrators into becoming a high-performance business.


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