“The future belongs to specialists with specific skills in horizontal and vertical market combinations.” This is the main takeaway in one of our latest studies for CBI on outsourcing.
Any company or group of companies that can deliver sector or domain skills has a noticeable advantage in Europe. It is important to specialise and remain 1 step ahead. Interested in which specialisms offer opportunities and why specialising is so important? Continue reading!
2 types of companies
There are 2 types of IT service-based companies; generalists and specialists. Generalists do not have a preference for where the client comes from. They produce their software by offering technology know-how and people with software development skills. These suppliers often do not have in-depth knowledge of specific sectors. Specialists have specific knowledge about certain sectors or horizontal market segments.
Client companies may still look for general programming services. But, a shift in demand is taking place towards outsourcing specialised services. These services combine technology know-how with domain knowledge. Examples of such combinations are:
- (Industrial) Internet of Things with integrated Big Data technology;
- Virtual Reality/Augmented Reality or a mix of both. For example, this is applied in PropTech and TravelTech with the integration of Big Data;
- Machine Learning, robotics, Artificial Intelligence and Blockchain technologies. For example, this is applied in FinTech or MedTech.
The distinct lines between technologies are blurring. Horizontal concepts such as the Internet of Things, Machine Learning, Artificial Intelligence, Augmented Reality, Virtual Reality and Big Data are merging. And they are also moving out of their traditional sectors. Blockchain, for example, is no longer only associated with the financial sector. Systems are merging between horizontal concepts and vertical sectors. This creates opportunities for service providers to specialise and discover niches in the industry.
Service providers can become less vulnerable to price pressure and competition by:
- merging concepts;
- combining technical knowledge with domain knowledge; and
- focusing on niche markets.
This will increase the chances of long-term success.
Read our studies to find out more about what trends offer opportunities on the European IT outsourcing market and what the demand is for IT outsourcing services. Also, take a look at our study about the (Industrial) Internet of Things integrated with Big Data. In this study, you will learn about how these horizontal services are merged in different sectors to create added value.
This article has been written by Globally Cool on behalf of CBI for the CBI Outsourcing (ITO/BPO) series of Market Intelligence studies.