Website/E-Commerce Becoming More Strategic, While Outsourcing Rate Flattens

February, 2019

Website and e-commerce outsourcing is one of the most ubiquitous types of managed services. However, after a recent dip, the percentage of organizations outsourcing in this area has been flat. This could be due, in part, to e-commerce technology becoming more strategic in nature. As more customers shop online and use mobile device payment systems, the web and e-commerce experience becomes a legitimate differentiator. That is apparently prompting some companies to bring e-commerce systems in-house.

As shown in Figure 2 from our full report, Website/E-Commerce Outsourcing Trends and Customer Experience, the percentage of IT organizations that are outsourcing at least some of this function is 49%, essentially the same as 2017 when the percentage was 50%. In 2016, the number took a large dip from 55% in 2015 to 46%. The number is unlikely to recover in the near future as e-commerce becomes increasingly complex and more closely integrated with back-end systems.

CE Webecommerce fig2 1030x687 - Website/E-Commerce Becoming More Strategic, While Outsourcing Rate Flattens

Website and e-commerce outsourcing covers a wide variety of operations. It includes everything from hosting an organization’s website to coordinating its entire e-commerce operation. It also can include designing and managing the website and managing web marketing operations. More recently, the growing impact of social media has meant that online service providers must often be experts in social media marketing, as well as search engine optimization. Moving beyond stand-alone web storefronts, e-commerce systems interface with CRM systems, supply chain management systems, and ERP systems to provide real-time data for managing inventory and forecasting customer demand. E-commerce systems also include the use of web APIs that allow buyer and seller systems to communicate directly. At the same time, older EDI systems continue to be deployed and extended in B2B commerce.

“Major business systems such as CRM, ERP, and supply chain management have changed the way businesses interact with customers and with how they manufacture goods,” said David Wagner, vice president of research at Irvine, Calif.-based Computer Economics. “Real-time data analytics, artificial intelligence, automation, and other technologies are allowing for just-in-time manufacturing and for personalized marketing services. E-commerce and the web are the customer-facing side of this journey. As the back end becomes more responsive and sophisticated, the customer-facing side needs to be as well.”

We define IT outsourcing as contracting with a service provider to perform an IT function that is commonly performed in-house. This report does not use the term “outsourcing” as a synonym for “offshoring.” In fact, most outsourcing is done with domestic service providers. From the point of view of the IT organization, any function that is not performed by its IT staff is outsourced, regardless of whether the outsourcing is onshore, near-shore, or offshore.

To help IT executives better assess their options in this always-changing landscape, this report analyzes the percentage of organizations outsourcing website and e-commerce operations (frequency), the average amount of work outsourced (level), and the change to the amount of work being outsourced (net growth trend). We also present data on cost and service experience and on how these trends differ by organization size and sector. We conclude with recommendations on how to engage with a web, e-commerce, or EDI services provider.

This Research Byte is based on our report on this subject, Website/E-Commerce Outsourcing Trends and Customer Experience. The full report is available at no charge for Avasant  Research subscribers, or it may be purchased by non-subscribers directly from our website (click for pricing).