Upswing in Global Outsourcing
March 26, 2010
According to the leading consultant advisory organization on outsourcing strategies worldwide, Horses for Sources, has revealed that there has been upswing in global outsourcing growth.
Horses for Sources has unveiled a report on the Current IT outsourcing, Business Process Outsourcing Landscape, and the report is based on interviews with more than a thousand executives.
Key information in the report, “Straight from the Horse’s Mouth: The IT Outsourcing and Business Process Outsourcing Industry Landscape in 2010,” suggests that 2010 is poised to be a robust year for adopting outsourcing. In addition, the major areas of increasing the scope of outsourcing include areas where there are heavy low-cost labor arbitrage support for both nearshore and offshore operations – this includes software applications, engineering management, call center, finance and accounting, human resources and analytics. Almost 50 percent of the companies that were interviewed said they would be increasing their outsourcing scope.
In addition, the middle market segment with $750 million – $3000 million in revenues are likely to be the most active with respect to outsourcing. The major drivers in outsourcing are bound to be cost reduction, prospect of globalizing business operations and reengineering business processes.
Meanwhile, the inhibitors standing in the way of outsourcing for 2010 are priorities pushed forward by the recession and politics, which implies a resistance to change the status quo. As far as vendors go, their global scale, financial stability, and excellence of operations are bound to play a leading role in which vendors are selected for outsourcing. Business transformation capacities will be differentiating agents.
Author of the report and CEO of Horses for Sources, Phil Fersht, said in a statement, “As the recession slowly lifts, many businesses, secure in the knowledge that their financial performance is on safer ground, start to act on their more transformative planning to increase productivity and source new avenues for revenue. This is exactly the state of play for most industries in 2010, with an unprecedented number of new firms moving into outsourcing engagements, with the objective of driving down operational cost, but also to globalize processes and force change into jaded business models of yesteryear.”
He added, “However, evolving into a global outsourced business-support environment is one of the most impactful and culture-changing experiences most companies ever have to experience. While the intent to adopt new outsourcing models is strong, the capability of many services vendors to deliver on this upswing in demand is questionable. 2010 will definitely be a banner year regarding which buyers are going to take the plunge, and which vendors will step up to deliver.”
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