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Businesses that want to win, serve, and retain customers on digital platforms are increasingly turning to American IT firms who can get them to market faster with more effective customer engagement solutions than offshore providers, according to a new CapTech study.
The study, Onshore/Nearshore Services Thrive in the Age of the Customer, a commissioned study conducted by Forrester Consulting on behalf of CapTech, shows that 63% of IT sourcing decision makers will hire more onshore third-party service providers for digital transformation projects in the coming year. Late projects, poor communication, poor quality, and escalating total costs were cited as the main reasons for bringing offshore work back onshore.
The survey found that U.S. service providers deliver more value and consistently better results for meeting the demands of today’s digitally empowered customers. A key driver behind this outcome is that onshore services are more grounded in agile development. Using the agile approach provides U.S. firms with a distinct advantage in being able to quickly deliver complex and innovative applications that are functional, scalable, maintainable, and secure, the study found.
Commenting on the findings, CapTech’s CTO, Vinnie Schoenfelder, said, “More business than ever before is conducted in a digital space, and consumers are quickly moving towards deeper engagement through mobile devices. Consumers are looking for rewarding experiences, and they move quickly in search of them. As a result, we are seeing a fight for customer engagement and brand affinity. In this environment, there is no bigger cost than the lost opportunity of a great design. Digital transformation is about developing complex consumer and business applications, doing it quickly, and analyzing and responding to customers’ shifting demands. A well-engineered transformation is your best opportunity to delight a customer and win them as a long term advocate. This research shows the importance of three components: engineering discipline and rigor, agile development practices, and mature DevOps. And it finds that U.S. services firms consistently get businesses to market quickly with more innovative and targeted solutions because they excel in these areas.”
An IT Director for a Forbes Global 2000 Consumer Packaged Goods company, and a CapTech client, said, "Outside of some of the simpler projects where our processes were very mature, the move to an offshore development partner has seen a decrease in overall quality and on-time delivery. We are looking to bring the work back from our offshore provider for smaller onshore partners to meet the same need. We have learned that they tend to be more agile, better at dealing with ambiguity, and they provide the much needed ongoing technical thought leadership our former partner completely lacked. It is my expectation that this move will be close to cost neutral, given much improved initial quality in delivery and less overall hours required to produce results.”
The study reported that the need to innovate when building customer engagement models for the digital world has disrupted conventional approaches. The importance of continuous development of consumer-facing digital technologies has led to the growing adoption of agile development methodologies, which creates the need to partner with U.S. professional services companies.
The study reported four key findings:
■ Outside services play a key role in the age of the customer. Companies are turning to outside providers to help improve the customer experience, improve product quality, accelerate time to market, and transform business processes. This reliance on outside services will grow significantly over the coming year.
■ U.S. enterprises will increasingly look to partner with onshore providers. Enterprises will be shifting their sourcing strategy to focus even more on onshore partners for digital transformation projects, with nearly two-thirds predicting they will hire a greater percentage of onshore providers over the next 12 months.
■ Onshore and nearshore providers are the ideal partners for digital transformation projects. While offshore providers are suitable for certain projects, onshore and nearshore partners are viewed as best suited to handle customer engagement, organizational transformation, application development, and data and analytics projects.
■ Offshore project quality can fall short. Overall project quality is believed to be higher using onshore firms. Project pitfalls offshore can include security concerns, delays, and poor quality creating need for rework, which drives up costs and increases time to market.
Tips from CapTech for Selecting the Right Partner for Successful Digital Transformation
CapTech is a national IT consulting firm that bridges business needs and technology. CapTech serves as a trusted adviser to some of the largest companies in the United States in the retail, banking, utilities, hotel and entertainment industries, including a number of clients ranked in the Fortune 50, as well as some of the largest state governments in the country.