10 Outsourcing Trends to Watch for Over the Next Year

by / ⠀Startup Advice / September 6, 2012

Here is the list of outsourcing trends to watch for in the coming 12 months.

1. Enhanced BPO growth: With the expected rapid growth of the global BPO market at an annual rate of 5.4 percent to $93.4 billion in 2015 , it is obvious that most countries would leave no stone unturned to relish a slice of the pie. Irrespective of their levels, service providers and business industries will strive hard to create new incentives in order to attract BPO jobs. Such incentives would definitely include reduced taxes, fees and of course free or subsidized rates for English speaking courses and technological nuances. Meanwhile, with Indian service providers becoming more and more expensive, those from other countries like China, Philippines etc would easily make their way for outsourced business processes till at least the mid-point of the food chain. Though China won’t be eating the pie of Philippines and Indian BPOs, expect south Africa and Mexico to do it. South America is also making some progress in it.

2. “Social” Media Connections: Strange but true, the great number of potential opportunities which depend tremendously on the social media market strategies are the ones to really look out for. When the customer feedbacks and complaints are no longer limited to phone calls and email missives, it becomes obvious that outsourced contact centers will need more tech-savvy employees to keep customers contended and connected through Facebook, Google+, Twitter and other social networks. Following chatter on social network, building a more authentic network of potential customers and readying strategic “quick-reaction” teams with enhanced responsiveness are some of the measures which will keep most outsourcing companies busy in the coming years.

3. Growth of multi-sourcing opportunities: Most outsourcing companies these days are totally rejecting single source deals in favour of more pragmatic outsourcing models that use a variety of specialized firms. However, with the increased burden on such multi-sourcing companies, they have started to panic and are striving hard to survive such tumultuous environments. Meanwhile, IT organizations are hiring more people to cater to the necessary management skills required. Only time can tell how these new strategies in outsourcing will play out.

4. Plummeting larger deals: While we have observed a continuous decline in the size of IT services contracts, the number of those contracts worth $100 million or less has increased three-folds according to outsourcing consultancy information services. However, the number of big sized deals and medium sized contracts awarded each year has plummeted to some extent after remaining fairly stable till 2009.

5. Fresh Pricing Models: With outsourcing strategies on the verge of getting saturated and continued pressure on their profit margins, outsourcing service providers are building even more innovative and oft riskier engagement models, including joint ventures, business-outcome based pricing, revenue-sharing arrangements, and dedicated centers of excellence.

6. Critical Security issues: “Many outsourcing companies have already started complaining about breaches of public security and it won’t be long before a company suffers a major public security breach. The only way to secure and protect company data is to look for  better alternative solutions”–says Pushkar Gaikwad, CEO of outsourcing giants WorkMonk Bangalore.In the meantime, security liability limits have become one of the most contentious negotiation issues between outsourcing customers and vendors today.

7.  Indian Outsourcers Setting up Shop in the U.S.: Again, it has been observed lately that many Indian as well as Chinese outsourcers are keen on setting up comprehensive U.S operations. This subtle but crucial observation recognizes the fact that you need to be in close contact with your customers and especially when you are serving at the highest levels of the value chain. Alleviating attrition related problems is also one of the major motives behind such migration. After the U.S suffered their recession, there arose serious problems regarding the diminishing cost structure advantage of offshore business. At the same time, it also put a tremendous amount of pressure on companies to find out more effective ways to cut down costs in order to maintain profitability. This, without doubt, proved to be a tenacious incentive for companies to search for alternative solutions.

8. Potential Cloud-sourcing opportunities: Recent surveys conducted by various credible web analytic agencies suggest getting boosts from next-generation delivery models as cloud offerings and remote infrastructure management. Service providers are trying to address some of the technical and perception issues that have delayed widespread adoption of cloud services

9. Specialist Market Entrants: One of the most peculiar trends or issues in outsourcing in 2012 is the inclusion of new market entrants in the form of specialists. For example, we might witness small companies which provide specific mobile application development solutions with all the software fully developed and crucial to their solution packages. This decreases time to market, business risks, costs and the convenience of proven software with little or no transformation needed.

10. Fresh Equity Ownership:  Last, but not the least trusted sources predict that the UK government will create a new equity ownership model for shared services and large outsourcing deals. Although this new move favours the small EU based companies better, larger companies like those German and US conglomerated can play their part too and struggle with explaining “part-ownership” to the market analysts.

The article is written by WorkMonk, an outsourcing platform which connects the companies in US, UK, Canada, EU etc to Indian IT and non IT service providers for free. If you are looking for an outsourcing partner, do check http://workmonk.com

About The Author

Matt Wilson

Matt Wilson is Co-Founder of Under30Experiences, a travel company for young people ages 21-35. He is the original Co-founder of Under30CEO (Acquired 2016). Matt is the Host of the Live Different Podcast and has 50+ Five Star iTunes Ratings on Health, Fitness, Business and Travel. He brings a unique, uncensored approach to his interviews and writing. His work is published on Under30CEO.com, Forbes, Inc. Magazine, Huffington Post, Reuters, and many others. Matt hosts yoga and fitness retreats in his free time and buys all his food from an organic farm in the jungle of Costa Rica where he lives. He is a shareholder of the Green Bay Packers.