Fire on their own: how technology development puts IT companies at risk

In the course of digital transformation, companies that previously ordered IT solutions themselves become centers of competence in the field of information technology. It’s unavoidable. And it is quite understandable. IT companies should take this into account in the business model.

Digital transformation forces large corporate customers in the field of information technologies to define a model for creating a product in the field of information technologies: outsourcing, insourcing, and crowdsourcing. Instead of the expected transition to outsourcing (each focuses on core competencies), leading corporations from various industries began to increase the potential of their subsidiary IT-service structures.

Although Sberbank Technologies, Lukoil-Inform and ITSK appeared relatively long ago, their weight in the IT market continues to increase. For example, Sberbank-Technologies increased its revenue in 2017 by 49% with an average growth of this indicator among the 100 largest IT companies by 12%, that is, the company continues to grow actively, “taking” potential orders from outsourcers. Therefore, to survive, “clean” IT companies have to consider what niches large corporations are trying to take from them.

The world is switching to IT

In the conditions of digitalization that has embraced almost all industries, information technologies are becoming the key “engine” of business. For a modern consumer, calling a taxi, writing to a doctor, interacting with the state and many other actions that have not so long ago been based on the use of extremely inefficient “analog” interfaces (trying to stop the car with a raised hand or call the dispatcher’s office, turn in the registry, running around with a pile documents on instances, etc.), turned into digital services, which can be accessed at any time, in any geographic location and from virtually any device.

The layer of new wave companies is rapidly growing, the basis of which is information technology. This is exactly what allows us to offer the client in the most convenient form the desired result: moving from point A to point B, high-quality medical advice, the availability of food in the refrigerator, comfortable apartments during a guided tour … And for this, as it turned out, we don’t need our own cars, doctors are “on a salary”, giant warehouses of products or apartments purchased all over the world.

Similar processes right before our eyes are taking place in a number of other markets that have recently been considered extremely conservative, including the banking and financial sector. Moreover, leading corporations in a hurry form digital transformation strategies that allow them to see what their improved and updated “digital copies” should become in the coming years. And how are they going to fight for attention, trust, and most importantly, for the money of the “digital counterparts” of their consumers.

It is here that a change occurs that radically changes the approach of the corporate customer to information technology. IT is no longer an auxiliary (supporting, significant, but still secondary) resource in relation to such basic attributes as having a banking license, access to hydrocarbon fields, developed production facilities, or, say, a network of outlets. Information technologies themselves are becoming the most important element of core business companies. As a result, approaches to the management of any processes occurring in this very sensitive area are changing. In the end, the whole apologetics of IT outsourcing was based on the fact that information technology is a non-core business for most enterprises, which means that the maintenance of such business processes can be trusted with external professional contractors. However, few would agree to let anyone go where a unique market offer is created. There, where the basis of competitiveness is now forged.

It’s hard to imagine that Google or Yandex, having decided to suddenly “optimize IT costs”, according to the results of the tenders, will transfer the further development of their search technologies and contextual advertising to certain third-party contractors on the terms of outsourcing. But in the same way, for example, any modern bank seeks to form a unique set of digital technologies that allow remote identification of customers, analysis of their behavior and the process of providing new services in electronic form.

Examples of “new” IT companies

Information technologies quickly “sprout” into corporations, updating their root system. And this, in turn, significantly changes the relations between customers and suppliers of IT that have developed over the previous decades. Moreover, the term “corporate IT customer” in relation to transforming businesses needs a certain rethinking. Indeed, many large companies that previously were classical consumers of information technologies (including the use of outsourcing elements) seriously began to create and scale IT platforms on their own.

The “Business lines”, which have relied on the clean-up of freight forwarding services, today have several hundred developers. The company, which helps clients to outsource non-key activities for them, is not in a hurry to outsource the development — very significant.

A powerful potential in the field of IT has a retail network “Magnet”. Well, for Sberbank or Tinkoff Bank, information technologies seem to have become much more important than having a banking license. And there are more and more such examples of the transformation of traditional market participants into service digital companies with a constantly growing internal technological core.

Along the way, many information technologies, previously considered the lot of a few professionals, are rapidly migrating towards the LCDP (Low-Code Development Platforms) and are being customized. This allows you to modify and develop the system directly during its operation with a minimum of coding and a maximum of visual design. If desired, the development is easily moved “to the field”, without requiring the involvement of exclusive services of external contractors. And this, in turn, contributes to the “pull-in” of a number of IT competencies into transforming corporations: solving problems that previously required the involvement of third-party contractors or the use of outsourcing is easier today, and it is more logical to do it on their own. Including forces captive firms.

Today, such “embedded” companies as Sberbank-Technologies, Lukoil-Inform, ITSK can rightfully be included among the largest players in the Russian information technology industry … There are dozens of similar teams with hundreds of developers and thousands of service specialists on the market.