Tuesday, December 12

Did Outsourcing Companies Meet 2010 Industry Predictions?

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Every time a year ends, groups of industry experts and organizations conduct studies and analysis on how the industry fared in the current year, and will then formulate a prediction as to how it will be in the coming year. This yearly trend does not exempt the outsourcing industry, especially since outsourcing has gained wider acceptance and is currently poised for massive growth. Given that there are many areas encompassed in the outsourcing industry that has growth potential, such as IT, recruitment process outsourcing (RPO), knowledge process outsourcing (KPO), and contact center outsourcing, it is more challenging for industry experts to formulate their predictions.

Back in January 2010, the National Outsourcing Association predicted that business process outsourcing will become even stronger as the recession weakens. This was deduced from the notion that companies will need to rebuild their businesses. They will need to look for an alternative that will cost less and will reduce efforts on hiring a team of full time staff, which is to outsource their processes to a service provider. Industry experts also predicted that small and medium enterprises will be venturing into outsourcing, which will make the industry no longer limited to medium and large companies. As for countries that will emerge in the outsourcing arena, the National Outsourcing Association predicted that China will see a growth in call center outsourcing and will continue to develop its capabilities in other fields. For others such as the Philippines, Brazil and Russia, these countries have great potential for growth as well in terms of global recognition.

Business developments, such as acquisitions and expansions, of numerous outsourcing service providers were in effect this year, such as IBM (NYSE:IBM) and Accenture (NYS:ACN). This is a good indicator that industry growth forecasts have materialized.

IBM (NYSE:IBM) recently announced that it has entered a 10-year contract deal with Bharti Airtel Ltd. (BSE: BHARTIARTL.BO) worth $80 million. IBM was on a roll throughout this year in terms of expansions and deals as it opened two new offices in the Philippines, one in Cebu early this year and another in the National Capital Region. Wipro (NYSE:WIT) and Tata Consultancy Services (NSE:TCS) are two other companies that opened offices in the countries mentioned by the National Outsourcing Association. In the first quarter of the year, Wipro Technologies, aiming for a global diversification, opened a new delivery center in Curitiba, Brazil. The Bangalore-headquartered company has had operations in Brazil for four years and the expansion shows that they are satisfied with the performance of their Brazilian employees. As for Tata Consultancy Services, they opted to open new centers in the Philippines for their business process outsourcing needs. Just recently, Philippines has attracted a lot of attention after it was reported that it surpassed its Indian competitors in the contact center field.

On another note, it seems that there has also been a shift towards China as well, although this is more towards IT outsourcing rather than in the contact center outsourcing industry, in contrast to the forecast reported by the National Outsourcing Association. Greg Leniston, UK Sales Director of Chinese IT service provider Bleum, mentioned that companies are opting for China as an alternative to India. China having a growth rate of 30%, as mentioned in our previous article entitled India’s Dominance in Outsourcing Starting to Fade, has fared well in terms of its growth in the outsourcing industry as a whole.

With the year about to close and outsourcing industry experts and organizations starting to release their predictions for the coming year, hopefully we can look forward to another year of growth and expansion.


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