This is because outsourcing is a way of cutting fixed costs and freeing up money to invest more strategically. Thought leaders here at NILF-2012 backed their statement by quoting the latest TPI index, which monitors BPO/IT outsourcing contracts worth over 22M Euro. The index found 2011 to have the highest total value of contracts ever in Europe - or the Europe Middle East and Africa. Mega deals accounted for around 60 % of total value. There were also 15% more contracts in total in the final quarter of 2011 compared to the same period a year ago. So outsourcing is on the up whereas economic confidence is heading in the opposite direction.
NASSCOM expressed the concern, how the current economic and global woes had impacted the Outsourcing sector along with the IT-Services. The buyer-provider landscape remains cautious but not concerned. Ousourcing is not only changing the services arena, but it's also changing the employment sector. Citing the statement, it's quite interesting to mention here that for the passed year 2011, the number of IT staff in the public sector was slashed by the largest amount in 25 years in 2011, losing 5,000 employees.
According to research from the body for public sector IT professionals, Socitm, spending on contract and shared services increased over 2011, resulting in a total of 22,000 IT staff, an 18.5% fall compared with 2010. More authorities are turning to technology to mitigate dramatically reduced budgets, according to the body’s annual research into IT trends in local public services.
With the given scenario purchasers will look to vendors to offer them help in savings and productivity. US recession, however, has some positive effects too on the industry. Hundreds of thousands of small medium enterprises (SMEs) are waking up to benefits of offshore outsourcing industry. Also the slowing US economy could push the outsourcing up to new levels to low-cost destinations and as per the global research firm Gartner, India here has ‘a definite advantage over other countries’.
So to better tap the opportunities, venders need to move to low cost destinations – either within the country or even outside of it. Trend is evident with many of the top firms opening their offices in countries like Philippines, Singapore, Malaysia, Sri Lanka and a few East European countries. Companies are also looking for new client outside the US – particularly in the English speaking countries of the UK, Australia, New Zealand and Canada.
Offshoring over the long term looks promising.