Ben Trowbridge, an outsourcing expert and CEO of global advisory firm, Alsbridge, has predicted the following outsourcing trends for the year 2007. Before making predictions, Trowbridge reviewed data from customers, providers, government agencies, research firms and trade and business media from around the world. His predictions were evaluated based on labor statistics, birth rates, economic indicators and internal corporate activities.
Trowbridge has predicted that Knowledge process outsourcing (KPO) will experience tremendous growth in the next three years. Another outsourcing service to grow significantly will be Engineering and Research. The outsourcing of procurement will increase as providers begin to achieve a true scale and market shares. Equity firms will again review the acquisition and rationalization of the outsourcing market.
In 2007, china will still lag behind India, as an outsourcing partner. Reasons for this include language-barrier, low national birthrate, intellectual property and other legal issues. On the other hand, Eastern Europe will emerge as a center for outsourcing and shared services. However, the”location” decision will become more challenging due to changing political and threat profiles.
The year 2007, is likely to be a good year for India, as Trowbridge predicts more growth in the outsourcing market, where he says, India will be successful in cutting complex and bigger deals. India must however move from a high-margin man-time voice pricing to true outsourcing price structures. Shared service centers will continue to represent half of the outsourcing activities. Indian providers are likely to participate and create hybrid solutions for outsourcing.
Although there is a tremendous amount of outsourcing in India right now, the offshore trend will not stop, but only increase in 2007. This is because the cost of labor in India will remain neutral when compared with the wage inflation in the U.S. Outsourcers from U.S are likely to speed up their outsourcing strategies, because of a tight labor supply in technology, accounting and other processes.
Trowbridge advises outsource providers to stay ahead of global trends and to remain cost competitive.
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