Key Takeaways The outsourcing industry will transform this year with a major emphasis on building value networks with outsourcing companies. Co-sourcing will become the new norm as businesses choose to support each other and share the risks. The IT sector will benefit. SMBs and startups will be the ones offering more business to outsourcing service providers. The majority of the firms will shy away from backsourcing and rely on outsourcing in the long run. There is a new kind of outsourcing practice called outcome-based outsourcing as companies look for service integrators instead of service providers. Dominating outsourcing countries face challenges from countries like Poland, Romania, Belarus, etc. New digital execution approaches will be created by the outsourcing companies to integrate strategies across digital platforms. What has changed with the outsourcing industry in 2020? Has it become more disruptive? How far have automation and robotics taken over the industry? Is it still wise to outsource in 2020 or not? And more importantly… Are the current outsourcing practices enough to succeed, now that the pandemic has affected all aspects of my business? These questions were on my mind for quite some time and as the global pandemic brought everything to a standstill, these questions started nagging me even more. I’m sure any IT leader or organization outsourcing or planning to outsource IT services (or hiring remote developers, working with dedicated teams, product development, or any other business process), must be considering these questions too. Here’s an approach I took to find answers to all these questions and calm down my anxious nerves! I started by searching for uncertainties surrounding the outsourcing industry in 2020 and found this report by Global Industry Analysts. It points to brighter days ahead for the outsourcing industry—predicting the market to reach the $220 billion mark in 2020! This helped eliminate my concerns about outsourcing this year to a certain degree, but it didn’t answer the questions I have about the outsourcing best practices in 2020, especially once all this global unrest is over. Then, I surveyed outsourcing trends to date, searched the web, and studied a number of case studies and reports to come to a conclusion. There are certain trends that are expected to take a complete turn after the lockdown, and digital transformation or business automation will be a popularly-adopted strategy. Outsourcing, especially IT outsourcing, has been completely shaken up. For enterprises to ride the wave of change and emerge on the other side, shifting gears today with the latest outsourcing practices is imperative. This is my analysis of how the outsourcing industry has changed in 2020 and what might happen in the future. Emphasis on building relationship networks has strengthened IT companies have been moving toward digital transformation and so has the outsourcing industry. By the end of 2020, we can hope to see a shift from the traditional value chain to a more flexible and scalable value network. In fact, building value networks has become a priority for many businesses in 2020. But what does value network mean in outsourcing? Value networks are connections you build to create value for your company or its processes. A value network in outsourcing would mean building a network of meaningful relationships or contracts with outsourcing companies in India, China, Ukraine, or any other country (even your home country) to add value to the outsourced or outsourcing services. You can expect to see different types of relationship networks. A purchasing network, where two or more firms will come together to leverage outsourced services for saving costs A service provider network, where different outsourcing service providers will come together to meet the complex demands and challenges A single enterprise might also look to hire remote developers from different service providers in order to improve their outcome. And that’s not all. I have spoken to several companies that have been outsourcing IT services, product development, or web development for a long time. The majority of them plan to explore the multi-vendor approach, especially for IT outsourcing. In the IT industry, multi-vendor outsourcing is all about outsourcing different aspects of their IT services to different companies. It will be like getting the IT architecture, microservices, cloud services, AI, ML services, and all other development or designing services from different companies to get the best from all. Businesses wouldn’t want to put all their eggs in the same basket if something similar happens in the future. Multi-vendor outsourcing means they can upend the drastic effect that such unrest might cause. Growing inclination toward co-sourcing Outsourcing is a buyer-centered market. The buyer, (the company taking outsourcing services), identifies all its requirements in an RFP. The seller, (the outsourcing company), feels it can fulfill the requirements and bids for the work. The price, tenure, team, technology, skills, everything is proposed per the requirements of the buyer. The services are for the buyer and so are the risks associated with it. But studying the trends in outsourcing for the past few months and analyzing the current global situation, it is clear that the focus is moving from just cutting costs to mitigating the risks associated with outsourcing. And based on the way the outsourcing commitments are taking shape, a new approach is emerging—an approach that focuses on creating value for both the companies (the outsourcing service provider and the client or IT leader). We call this approach “co-sourcing.” What is co-sourcing? This is an approach where companies hire an external team that acts as their internal team and the two parties work in collaboration. Both the internal and external teams work together, side-by-side to create value. Together, they share the risks, face issues, and come up with quick solutions. Motivating both the parties, co-sourcing will help improve the IT outcome achieved from outsourcing. This approach vests its interests in co-creating new values to gain a competitive edge. Even during unrest, they can easily go through their contract and ensure that the work is not hampered. Their interests will be focused on the outcome of the collaboration and not in