Saturday, December 16

Outsourcing Sectors to Watch In 2011

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As predictions for the coming year are in abundance, different analysts and publications have weighed in on sectors in the outsourcing industry which they deem will be a sector to watch. Aside from mainstays such as medical billing outsourcing or medical coding outsourcing, and information technology outsourcing, which have been some of the most talked about sectors of this year, other sectors such as financial services and recruitment process outsourcing have also been identified as one to watch in 2011.

Outsourcing companies have been expecting the shift towards healthcare in the coming years, alongside medical billing and medical coding outsourcing, trends toward pharmaceutical and research outsourcing have also played a part in 2010, and is expected to continue on to 2011. Companies such as technology enabled solutions and services provider, CSC (NYSE:CSC) and recently, Towers Watson (NYSE:TW), have invested in acquiring companies that would complement their healthcare related services.

Among the financial services sector, countries such as Sri Lanka and China are banking on its continued growth to boost its standing in the outsourcing space. Given that with outsourcing provider, Accenture’s (NYSE:ACN) boost in revenues from the financial services was at 18% on a year on year basis for its first quarter 2011, financial services outsourcing presents a healthy picture for the coming year. Among the notable financial services related outsourcing renewals and acquisitions in the past few weeks is the contract renewal of Ferrari’s subsidiary, Ferrari Financial Services with outsourcing provider, Fiserv on the 1st of December and Deloitte Ireland’s acquisition of Curach Consulting on the 14th of December.

Meanwhile according to Zain Wadee, director of recruitment outsourcing firm hyphen, “There may well be growth in international recruitment process outsourcing deals as organizations look to leverage increasing mobility and strive for consistency of practice and a broadening of recruitment process outsourcing services to cover services over and above talent acquisition.” Indeed, companies such as Rio Tinto (NYSE:RIO), who on the 30th of November signed a recruitment process outsourcing contract with Manpower Inc. (NYSE:MAN), are now looking towards outsourcing providers to assist them in their search for qualified, skilled labor. Recruitment outsourcing providers such as Futurestep are already preparing for 2011, as the company opened its Houston service management center on the 7th of December, as well as new facilities slated in Australia-New Zealand and Europe in 2011.

IT outsourcing however, is still the main player to watch in the outsourcing industry. Even with the current downturn in the UK, areas such as Eastern Europe are seeing higher demand for IT outsourcing. Given the recent IT outsourcing contract wins in the sector among varied fields such as healthcare and telecommunications, IT outsourcers will not likely run out of customers next year. Technology giant Hewlett Packard (NYSE:HPQ) is just one of the companies with contract wins in the past few weeks, with the company winning two contracts in a matter of days within Europe, the first from German utilities company E.ON (ETR:EOAN) for $1.4 billion on the 15th of December, and the second from energy company, BP (NYSE:BP ) for $400 million on the 21st of December. Other notable outsourcing deals include Hilton Worldwide’s multi-year agreement with TCS (NSE:TCS) as well as CGI’s (NYSE:GIB) and Unisys’ (NYSE:UIS) IT indefinite-delivery, indefinite-quantity agreements with the CDC and FBI respectively on the 21st of December.

These as well as other sectors in the outsourcing industry should prove to be interesting to watch, especially since a number of major factors remain which could affect it drastically either positively or negatively in 2011.


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