Government Technology

Top Five Outsourcing Trends for 2009



December 29, 2008 By

Companies will outsource operations closer to home, demand immediate savings, pressure service providers and advisors, value professional certification and local expertise, and emphasize social responsibility in 2009, predicts the International Association of Outsourcing Professionals (IAOP).

Domestic service providers and near-shore destinations could be the big winners as the outsourcing industry goes through turbulent times in the coming year according to IAOP, the global standard-setting organization and advocate for the outsourcing profession.

IAOP thought leaders based predictions on an analysis of more than 25 factors expected to impact the industry, including tighter controls and government oversight, new initiatives by the incoming U.S. president, and slower growth in developing countries.

Among the top five predictions from IAOP are:

  • Outsourcing will stay closer to home. With available labor from layoffs in many industries and tightened risk profiles of companies, especially in the financial services industry, companies won't have to go far offshore to find talent. Planned initiatives by Barack Obama and increased government spending on infrastructure projects could lead to more domestic outsourcing, particularly for construction, real estate and technology, IAOP predicts. Outsourcing destinations such as India and China will be challenged by the closer-to-home locations. Providers in these countries also will focus more on their domestic operations.
  • Global uncertainties will create outsourcing volatility. Overall, the fast-paced growth in outsourcing will slow in 2009, as companies lower their spending on information technology, consolidate or exit markets, and find skilled labor locally from layoffs in financial services and other industries. "In many ways, it will be the best of times and the worst of times," said IAOP Chairman Michael Corbett. "In this turbulent environment, it will no longer be a rising tide that can lift all boats. Only the truly seaworthy will prosper." Global uncertainty and customers' desire for immediate and guaranteed cost savings will lead companies to seek shorter outsourcing contracts with the ability to adjust volume and service level terms. IAOP board member Atul Vashistha, chairman of neoIT, projects that companies will work with fewer key partners and want to pay less for services, noting rates have already declined by as much as 5 percent in many areas from just a year ago.
  • Professional expertise will be valued. With companies putting a greater emphasis on immediate larger cost savings and lower risks, outsourcing service providers' profit margins will be reduced. "Service providers will find themselves being squeezed between lower growth, capitalization constraints and higher demands for cost savings, driving profit margins down," said Corbett. Outsourcing customers also will rely more on the expertise of outsourcing professionals in their own organizations to help manage the outsourcing process, putting pressure on advisors to demonstrate higher value. "This increasingly self-service oriented customer model will be further fueled as more organizations implement outsourcing centers of excellence and as more professionals gain certifications," said Jagdish Dalal, managing director, thought leadership, IAOP.
  • Strategic companies will prosper. The economic meltdown could create opportunities for strong, well-positioned companies, according to observations by Booz & Co, a founding IAOP member. "While the economic climate will not immediately improve, companies involved in outsourcing that act strategically and decisively for the long term will be increasingly valued and sought," said IAOP board member Sven Govaars, senior vice president, Colliers International.
  • Social responsibility and green will be outsourcing themes. New government direction under Obama could promote higher emphasis on socially responsible business environments, driving outsourcers to create solutions that address them. IAOP predicts these will include industry competitive employee retention and welfare programs, as well as green operating environment for technology, real estate and manufacturing outsourcing service providers.

The International Association of Outsourcing Professionals (IAOP) is the global, standard-setting organization and advocate for the outsourcing profession. With 40,000 customer, advisor and provider members worldwide, IAOP helps companies increase their outsourcing success rate, improve their outsourcing ROI, and expand the opportunities for outsourcing across their businesses.

 


| More

Comments

Add Your Comment

You are solely responsible for the content of your comments. We reserve the right to remove comments that are considered profane, vulgar, obscene, factually inaccurate, off-topic, or considered a personal attack.

In Our Library

White Papers | Exclusives Reports | Webinar Archives | Best Practices and Case Studies
Meeting Constituents Where They Are With Dynamic, Real-Time Mobile Engagement
Leveraging the proven and open Kofax Mobile Capture Platform, organizations can rapidly integrate powerful mobile engagement solutions across the spectrum of mobile image capture, mobile data capture and complete mobile process integration. Kofax differentiates itself by extending capture to mobility, supporting multiple points of constituent engagement. Kofax solutions dynamically orchestrate the user’s mobile experience from a single platform—reducing time to market, improving process perf
Public Safety 2019
Motorola conducted an industry survey on the latest trends in public safety communications. The results provide an outlook of what technology is in store for your agency in the next five years. Download the results to gain this valuable insight.
Improving Emergency Response with Digital Communications
Saginaw County, Mich., increases interoperability, communication and collaboration with a digital voice and data network, as well as modern computer-aided dispatch.
View All

Featured Papers