The End of Service Desk Outsourcing

When we launched Freshservice, we got a lot of calls from people who wanted to outsource their service desk. At first, we were confused, sort of. Wasn’t it very clear that we were a service desk software on the cloud, or were we doing something wrong with our marketing? A quick, tense evaluation said no, and we heaved a sigh of immense relief. And before we had figured out where to point these leads towards, the calls stopped. Not abruptly, mind you; they just thinned out over time. One reason for that is probably because the Freshservice brand is getting stronger and more and more of our happy customers are talking about us and putting the word out in the field.

But we were still intrigued. Obviously, there was more to this.

The answer wasn’t particularly difficult to arrive at, once we dug into some literature on the web.

The beginning of outsourcing

It was in 1989 that the first big IT outsourcing deal was signed between then behemoth Eastman Kodak & IBM, offshoring some of its support functions to the Big Blue. And it was from here that the outsourcing story gathered steam. Businesses from then on started outsourcing whatever they could, their aim being cutting costs and the advantage of being able to concentrate on their core business. The 90s and early 2000s were big for outsourcing, but then things started to change.

The late 2000s marked the advent of the cloud as a force, & suddenly the cost of having to do some of these tasks in-house started coming down drastically, thanks to SaaS. The tools necessary were moving to the cloud, and for businesses, it just became a simple matter of getting the people who could use them.

The shift to the enterprise

It began with Salesforce, as the old-timers say (who aren’t really old-timers. Salesforce was started in 1999), who was the first company to deliver enterprise software via their website. And when Amazon Web Services’ suite was released in 2002, providing the first widely accessible cloud computing infrastructure service, the number of SaaS tools really took off. Cheaper and immensely easy to use, these tools made it easy for businesses to do all their support/back-office tasks themselves. They just needed some smart people; the tools were a few clicks away.


Fast forward to 2014, & SaaS has practically taken over the IT landscape, with both enterprise & SMBs choosing relative newcomers them over legacy players or even thinking about outsourcing. Which is the situation when I ask this question, sitting in a SaaS company that makes tools to do exactly what would either be outsourced or would take inordinate amounts of time and resources to achieve a little more than a decade ago.

So, is this the end of service desk outsourcing? Will this be the last decade in which IT will be seen as a cost center that can be outsourced? Maybe, in the way that the calls asking us for outsourced Service Desks fizzled out, service desk outsourcing is dying out too?

The rise of SaaS

The answer to this question is not simple, though. Issues such as service quality, technology, and uptime dominate the discussion. Organizations which distrust cloud tools usually cite one of these as a problem. But the truth is that it has been long since these specific issues have been resolved. Service quality has been improving consistently and now are universally acknowledged to be better than any sort of on-premise system, the technology bears no comparison and the uptime argument is invalid as most SaaS providers have better uptimes than on-premise providers.

What does this mean for Service Desk outsourcing, then? Is the end nigh?

The right question

Allan Dickinson of Compass Consulting, writing in 2011, says, “..(it has been) a lifetime in the field of IT where technology changes often and the equipment used two decades ago is dramatically different compared to what is available today. If outsourcing is still an applicable model, with all of the changes that have taken place technology-wise over the years, are we still asking the right questions? Has IT outsourcing taken on a new role in today’s business world?”

I think this is the right way to think about IT and service desk outsourcing at this time. The conclusion that Service Desk outsourcing is a thing of the past is natural. But maybe what we should ask outsourcing to do has changed.

This may not be the end of service desk outsourcing, it just may be the end of outsourcing the way we know it.