Outsourcing Outlook (Outlandish)

Saturday, December 16, 2006 at 05:01 PM

If your neurological system is functioning properly and you've managed to avoid the coma state, you know that offshoring/outsourcing is alive and well, and making many workers in this country unwell.

Here's a prediction on the "New Year" trends for offshoring of Information Technology (IT) and Business Process (BP) functions, from Global Services (apologies for the jargon, it's theirs, not mine):

  1. Small and medium enterprises...will become significant participants in services globalization.

  2. Firms will adopt the "cities of excellence" model, sourcing services from the best location.

  3. Multisourcing will dominate as mega-deals will be sourced to a mix of tier 1 and "best of breed" tier 2 service providers.

  4. IT/BP Outsourcing growth will be supply-constrained in an extremely strong demand market.

  5. Globally, service providers will witness a significant resource crunch.

  6. Engineering services, R&D Services, ERP, infrastructure management, product development and health care will see increased traction in 2007.

  7. Captives will see heightened activity in 2007, with parent companies considering spin-offs to cash out.

  8. Offshoring of customer-facing processes will slow down, and some may even move back onshore/nearshore.

  9. Tier 2 and tier 3 service providers will spread their global footprint by making significant overseas acquisitions.

  10. India will continue to be the leading destination for IT/BP Outsourcing. The Philippines will come in a distant second, and China will trail behind for next several years.

In plain English: it's going to get worse as small and medium firms offshore more, and the phenomenon grows in the fields of engineering services, R&D Services, ERP, infrastructure management, product development and health care.  Have a Merry Christmas, and a very Happy New Year.