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Expected Trends in Global IT Outsourcing

Sep 16, 2008
The global sourcing industry continues to grow at a rapid pace and there is a lot of speculation as to what the coming months will bring. According to Gartner Research, a research analyst firm, spending on offshore IT services is anticipated to grow by 40 percent in the United States and 60 percent in Europe in 2008. Below are some of the projected trends for the upcoming months.

Countries other than India will start attracting more outsourcers. India has long been the leading provider of global IT services. The country offers many great benefits to outsourcers, which is why it has remained in the lead. While this country is expected to remain the top destination for outsourcing, there are more challengers in the industry. Global sourcing providers in China, South America, Latin American and Eastern Europe will become significant competitors to those located in India.

Global sourcing providers will start to consolidate. As competition increases within the global outsourcing industry, many of the leading IT service providers are expected to consolidate by purchasing smaller competitors. There is also speculation that mergers and acquisitions will increase, causing outsourcers to have a smaller amount of suppliers to choose from.

More companies will outsource remote infrastructure management (RIM). RIM includes managing servers, applications, networks and databases. The market for outsourcing RIM is estimated to grow 60 to 70 percent in 2008. This type of outsourcing is considered to be an asset-light deal and offers a lower cost infrastructure for the outsourcer. As RIM outsourcing grows, traditional infrastructure outsourcing will start to decline.

Outsourcers will demand higher quality work and more services. Most outsourcing companies have focused on cost reduction as the main reason for global IT sourcing, but more emphasis is expected to be placed on high quality work and additional services. Outsourcing companies will start looking for better talent, expertise and flexibility from the global sourcing partner. Higher-value work, including process improvement and application portfolio rationalization will be in greater demand.

Green outsourcing will become even more important. Environmental concerns are on more consumers' minds and therefore a new focus for corporations. Outsourcers have started to require that suppliers adopt green policies. According to a study by the Brown Wilson Group, out of the 20,000 outsourcers surveyed, 43 percent of outsourcing companies stated that green factors would be important when choosing a supplier for the first time. More than 94 percent of executives that were surveyed stated that they plan to add green clauses in their renegotiation processes. This emphasis on environmental concerns could force more global IT sourcing providers to develop eco-friendly processes and policies.

It will be interesting to watch the new trends in the global sourcing industry in the months to come. One thing is for certain, the industry will most likely continue to grow at a rapid pace.
About the Author
A&E Consulting is a full service consulting firm that has been successfully helping clients with their global needs. Visit http://www.globalsourceyourit.com or call 818-572-8399 for more information.
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