How outsourcing industry will shape up in 2009 - Top 5 predictions by Param Shobhit

Though 2008 was fairly good year for the outsourcing industry, it cannot be taken as pointer to what is going to happen in 2009 as the world economy has taken a turn for worse in the last quarter of 2008. Things are fluid at the moment. But this uncertainty is as much related to the growth prospects of the industry as it is related to the type of work being outsourced. With companies in the US and Europe downsizing at a frenetic pace forced by slackening demand, outsourcing may turn out to be cost competitive alternative for many.

In 2009, jobs which provide quick return on investment (ROI) and/or facilitate short-term business objectives that bring immediate cost savings will take centre stage in getting outsourced. They are likely to take the place of longer-term engagements aimed at improving end-to-end business processes.

The focus will be on matching the operating costs with reduced revenue/profits levels and in cutting down the short-term capital outlays with the help of outsourcing web development and maintenance, software development, customer servicing, etc.

Here are the top five predictions for 2009:

1. Volatility: Choppy macro economic conditions will translate into non linear, volatile outsourcing market space. Some companies will exit the market to concentrate on the domestic service providers. New companies which hitherto stayed away from outsourcing will make an entry to save costs and to focus on the core competencies. And some sectors like financial services will suffer while others such as outsourcing of web services will see an upsurge. Whatever may be the scenario, one thing will remain constant - companies will work with fewer key partners and would want to pay less for services. Rates have already declined by as much as 5 percent in many areas from just a year ago.

2. Professional vendors will fare better: Clients will be more demanding and stricter regarding the quality of services, reworks (in case of web development outsourcing, web services outsourcing et al), adherence to dead lines and so on. In this environment only those service providers will survive which can provide larger cost savings and lower risks amidst lower growth and squeezed profit margins. In other words, only those vendors who are professional and efficient in what they do, have process driven development and delivery systems and who are flexible enough to mould themselves with the change in the wind direction will emerge as the most sought after outsourcing partners.

3. Strategic companies will prosper: Since the focus will be on larger cost savings and better risk management, those outsourcing vendors who can act as strategic partners working strategically and decisively for the long term will be preferred. So this economic meltdown could create opportunities for strong, well-positioned companies.

4. Social responsibility and green will be outsourcing themes: The world’s most powerful man is a Democrat with issues such as employee welfare, socially responsible business initiatives, green operating environment for technology, real estate and manufacturing etc. close to his heart. His policies are bound to encourage the outsourcing vendors who can serve his vision. So the emphasis will be on socially responsible business environments, driving outsourcers to create solutions that address them.

5. Outsourcing will come back to home: The recession has resulted in large number of work force joining the unemployed list. This will result in more and more companies opting for domestic outsourcing in place of far offshore outsourcing. This strategy is also politically favourable as Democrats, with their well known opposition of offshore outsourcing, take power in the US. Also with Barack Obama looking to spend a mammoth amount of money on construction, real estate, technology etc. to shore up the economy, the scene looks set for domestic firms taking the space of offshore firms in outsourcing web development, software development, customer servicing etc. to some extent.


Param Shobhit is a senior copywriter and leads a team of talented content writers at Wisitech InfoSolutions Pvt Ltd., a leading outsourcing web development and seo outsourcing
company based in New Delhi, India.

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