To sustain growth in today’s business environment, established companies, cannot any longer simply rely on established process and business models but have to constantly improve their core process. Furthermore, efficiency improvements are no longer enough to maintain business, and companies must boost their productivity and embrace new digital business models to sustain revenue growth.
According to an OECD report, productivity growth has been declining since the 2000s and stands near historical lows today. In fact, in recent years, the total labor productivity growth stood at a 0.2%, compared to a positive 1.4% in 2002-2007. Yet there is hope. Digitalization offers the opportunities that could boost productivity growth; but action is needed to overcome the barriers of new digital tools and products by small and medium-sized enterprises at all levels, investing in hard and soft digital infrastructure.
In particular, small and medium size companies live within the duality of economy of scale and resource scarcity, especially in the IT environment where new multinational companies act as magnets for new talent pools. Nevertheless, agility and fast go-to-market is no longer a luxury, it is an operation efficiency given by new product life cycles which lay at the very core of its organizational survival. “Business agility”should be adopted at all organizational levels by embracing new ways of organizational structures, such as collaboration agreements between adjacent companies and outsourcing of complementary competences.
In such an environment, new digital solutions must be developed at speed and purpose, and to do so, new outsourcing models have to be adopted, providing fast time-to-market solutions enhancing collaboration. To allow a timely execution and reduce the cost of change, constant interaction is required between all stakeholders of the product development, and the user cannot simply remain out of the product development cycle.
Agile outsourcing companies which offer a dynamic environment for product development with tight interactions for independent as well as large corporations, will strive to embrace agile product development techniques. At the core of its success, outsourcing companies and corporations will have to develop without precedent customer intimacies to the point where outsourcing companies will evolve towards external-internal product development teams, supporting key product development steps and boosting product impact by outperforming key value metrics particularly in fast pace environments.