The IT Outsourcing Trend: Why Outward Leads to Upward


In its 10th Annual PricewaterhouseCoopers CEO survey, PwC set out to resolve a seeming contradiction. Is outsourcing is a deadly mistake or the secret to uncapped growth? Both assertions are out there – so which is true, and how to reconcile them?

The survey was released in 2008. Even then – eight years ago – there was a sense in the air that outsourcing could become a crucial step on the path to maturity, triggering a new phase of growth in a company’s evolution. Since then, time has proved that notion true. But it’s not a silver bullet.

New report: some form of outsourcing is necessary

This month, Insurance Networking News connected the dots between outward and upward in their newest report on the topic. To move forward on top challenges identified by CIOs for 2016 – including operations, talent availability and budgetary restrictions – some form of outsourcing is necessary.

That said, it’s not a one-size-fits-all. “Carriers need to find the optimal level of outsourcing for themselves,” said Insurance Networking News Contributor Chuck Ruzicka.

For example, one insurer may use a variable or blended staffing model, while another may expand their contract for traditional application development and maintenance. To be fair though, the traditional approach is losing popularity as cloud-based outsourcing expands. “CIOs indicate that [they] are looking outward, and that they will be increasingly using cloud-based services and outsourcing,” Ruzicka said.

How has outsourcing evolved over the last several years?

Some things haven’t changed. When PwC released its survey, outsourcing was already “deeply established” as “an entrenched business strategy maturing and evolving to deliver value beyond just cost savings.” Among its core benefits, it offered “a level of strategic and operational flexibility unattainable through any other means.” Its competitive advantages included:

  • Logistics
  • Manufacturing
  • Customer support and service
  • Research & development
  • Human resource management

Of course, some things have changed a great deal. Cloud-based outsourcing isn’t just for pioneers anymore. Midsize insurers in particular are expanding their use of outsourcing, Ruzicka said.

Challenges remain, but they are surmountable

Outsourcing is a complex process, not a flip of the switch. With changes unfolding in the business landscape, in the evolution of a particular company, in the language and tools of IT, the process is not always easy and must be considered case by case, suited to the individual needs of a specific company.

But “sophisticated leaders don’t necessarily fear that complexity,” PwC said. “For them, it is the normal path of a maturing business strategy and a manifestation of an increasingly global environment.”

In short? While outsourcing is not a silver bullet, those who master its complexities stand to reap the benefits. More than ever, CIOs understand that if they want to move upward, they need to reach outward.

When you are ready to reach upward with your policy administration system, think of Silvervine Software. Our latest report, “Losing Your Legacy” will help you sort through new system requirements and considerations. Download it here.