6 Outsourcing Trends to Watch in 2012
Undoubtedly, outsourcing has far surpassed the expected peripheries of success and with the pragmatic potential that it offer, entrepreneurs and small businesses alike are swimming against the mainstream tides and have stated outsourcing almost every service on demand. As such, outsourcing has now become more like a portrayal of your “coolness quotient” and definitely the top business trend in this decade. With all these hue and cry, there comes but one obvious question to the common mind: What does the future hold for the outsourcing industry in India?
Throughout the decades, wise men from various cultures and especially India have all the more preached that although certain methods of business thrive in certain environments, it’s not long before they are proved futile by the ravages of time. Though India has managed to position itself as a major outsourcing hub, questions about its future in outsourcing continue to re-surface in industry circles. However, it is evident in the case of outsourcing that careful observation and analysis of the recent trends are of utmost importance if we want to avail of the benefits of outsourcing for long. I have prepared a list of five of the most crucial trends in the outsourcing realm of 2012. They are:
1. 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.
2. 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.
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 all 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. 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.
5. 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.
6. 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