Startup Guide: Importance of Outsourced Digital Transformation Processes

Appeared in CIOL.com | 20 May 2021
By Rajarshi Bhattacharyya, Chairman and MD

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Most forward-thinking organizations that are striving to become future-proof know that digital transformation will pave the way to success. Digital Transformation gives rise to newer business models, modern systems and processes, digital-first culture across the organization. In some cases, businesses also have the opportunity to enter new business domains; thus serving a different set of customers.

Today, organizations across all industry verticals are going digital to remain competent. Other benefits of digital transformation are higher efficiency, better productivity, intelligent decision making; faster go-to-market, improved customer satisfaction and enhanced profits. Despite all the benefits, an IDC analysis estimates that 70% of all digital transformation initiatives fail to reach their objectives. In 2018, out of US$1.3 trillion invested in digital transformation, it was estimated that more than US$ 900 billion was wasted!

Organizations fail to get their full Returns on Investment on the digital transformation process that is unsuccessful. The challenges are many, such as difficulty in letting go of age-old legacy infrastructure by employees; embracing the digital culture and lack of digital skill set within the organization. Further, there is lack of knowledge to implement the complex process of digital transformation. Many a time, there is no alignment and coordination between the leadership team and the teams bringing about the transformation.

Taking a digital-security approach is often overlooked by in-house teams.

Why is outsourcing Digital Transformation important?

According to a report from Accenture, almost 90% of businesses partner with a third-party service provider. This third-party service provider supports them with at least one aspect of digital transformation. This outsourcing of the process addresses the challenge of capacity and skill gaps within the organization. Overall cost reduction, scaling at a quicker pace, faster go-to-market are other advantages that come with outsourcing. Additional IT expertise from external partners will significantly reduce the burden on internal IT teams. IT Teams within the organization are always tied down with issues relating to business-critical applications and have to attend to them on an ongoing basis.

At the same time, organizations can have access to IT experts from the outsourced firm. These have better expertise and experience. Some services such as business analytics and big data provide better insights and business outcomes but are expensive to have the facility in-house. External experts can provide the skill sets on several new-age technologies. Some include AI/ML, Deep Learning, Robotics and others that can be leveraged.

Risk Mitigation and Flexibility

Risks and liabilities can be mitigated to a great extent as the external experts would have already had rich experience in working on similar projects as per best practices. The external firm will also be better equipped and up-dated with cyber-security practices and have global capabilities. Transformation can be faster and economical too when outsourced.  Better customer experience can be provided as well.

Flexibility to scale as and when there is business requirement is possible by outsourcing the process to an outside professional organisation. With this, cost and resources can be managed efficiently and at the same time business needs are met when needed. Better cyber-security measures can be leveraged by outsourcing the digital transformation processes. The external firm would already have had the best cyber-security practices in place with lesser risks to data theft and they would have continuously updated their security solutions.

Few things to take note of!

While outsourcing digital transformation projects, few things should be taken into consideration.  The goal for the efforts should be well-defined, with the entire organisation following them religiously. When the resources and goals are clearly defined, getting the appropriate partner to manage the digital transformation needs becomes easier. Fixing the budget and ensuring the external firm sticks to it is a necessary step to be taken.

Before closing on the digital transformation firm, it is important to verify their credentials, get client references and a detailed plan with budgets confirmed. With the right strategy in place and the right digital transformation partnership, outsourcing will have several advantages as it leads to better operational efficiency and business outcomes.

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