The DevOps Impact on IT Outsourcing

With enterprises accelerating their pace and leaping forward with DevOps, IT outsourcing vendors also have some catching up to do.

As enterprises’ DevOps journey begins, what does it mean for the IT service providers? Most companies outsource some part of their software development work, so it becomes inevitable that their DevOps journey includes their outsourcing partners. This means a significant transition awaiting IT outsourcing companies. According to an analysis of Nelson Hall’s UK Outsourcing contracts for 2014, UK witnessed contracts potentially marking the introduction of DevOps thinking with application and infrastructure transformations starting to be coordinated within a single contract within contracts with transformational intent.

Commenting on the impact of DevOps on outsourcing contracts, Rahul Madhusudan Joshi, Industry Principal, Infosys says, “In the near term, we believe that DevOps will have a limited impact on IT outsourcing. However, in the medium- to long-term, we believe that outsourcing contracts will change significantly on account of DevOps and associated technology innovations like application containers, configuration management, and data management solutions.” With enterprises looking at adopting DevOps methodologies, it calls for a transformation not just within the client organization but on both sides. “The IT services industry will now have to realign itself or be consecrated to ignominy,” warns Bobby Varanasi, Chairman and CEO, Matryzel Consulting. The industry will be looking at integrating the entire value chain from development to operations.

Industry experts indicate that the combination of digital technologies and concepts like DevOps is fuelling an era of transformative IT outsourcing. “DevOps offers the Indian IT industry an exciting opportunity to transform the way IT services are developed, deployed, and managed,” suggests Karthik Padmanabhan, Executive, Cloud Ecosystem, Cities, BizDev & Cloud ISVs, AP, GCG & Japan, IBM.

Outsourcing vendors are also waking up to the new realities and are looking at building their capabilities in this direction. “As the traditional IT moves more closer to IT as-a-service model, any development/enhancement services being provided by vendors would only fit the action if they work on the DevOps conveyor belt model and have rapid provision capabilities,” says Kalyan Kumar B, SVP & Chief Technologist, HCL Technologies.

In line with the changing needs of enterprise clients, outsourcing contracts are also likely to undergo changes. For instance, a T&M model might not encourage service providers to reduce manual labor and use automation tools as required by DevOps, as the payments tend to be linked to labor. Hence, incentives should be aligned in such a way that provider should benefit from any improvements resulting from DevOps so that it is a win-win situation for both the parties. Another important aspect to consider is getting the right technical skillsets. “The IT services industry will have to invest in developing a large cross-functional resource pool (across technologies, interpersonal skills) over the coming years. We are also likely to see a consolidation of boutique firms that are currently offering DevOps solutions to enterprises,” says Joshi.

For service providers, it marks not just transition to DevOps but the need to be seen as a digital transformation partner for the clients. “When you develop DevOps capabilities you don’t do it alone, you offer the clients a foundation that enables digital transformation,” says Barton George, Director, Developer Programs, Dell Services. He adds that outsourcing firms like Dell Services can help clients to focus on their customers and evolve quickly. As digital transformation becomes a top priority for enterprise clients, service providers too are under immense pressure to transform their businesses digitally. “Concepts like DevOps would bring more efficiency and agility to the traditional operations of service providers, which is a key requirement for service providers to become digital businesses,” remarks Naveen Chhabra, Senior Analyst, Forrester Research. Across enterprises, DevOps adoption is more evident in the new age companies where new technology adoption is high. It also varies depending on the maturity of client processes. The adoption seems to be fairly high in verticals like retail, manufacturing, and financial services, whereas it is lagging in old economy verticals.

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