Top Five Outsourcing Trends for 2009 Predicted by International Association of Outsourcing Professionals
Outsourcing closer to home, socially responsible outsourcing and industry volatility among developments expected in the coming year
Editor’s Note: IAOP executives are available for interviews on 2009 forecasts and outsourcing trends.
POUGHKEEPSIE, N. Y., Dec. 29, 2008 – Companies will outsource operations closer to home, demand immediate savings, pressure service providers and advisors, value professional certification and local expertise, and emphasize social responsibility in 2009, predicts the International Association of Outsourcing Professionals (IAOP)™.
Domestic service providers and near-shore destinations could be the big winners as the outsourcing industry goes through turbulent times in the coming year according to IAOP, the global standard-setting organization and advocate for the outsourcing profession.
IAOP thought leaders based predictions on an analysis of more than 25 observations of global factors impacting the industry, ranging from tighter expected controls and government oversight, to promised new initiatives by the incoming U.S. president, and slower growth in developing countries.
Among the top five predictions from IAOP to watch for are:
# 1 – Outsourcing will stay closer to home
With available labor from layoffs in many industries and tightened risk profiles of companies, especially in the financial services industry, companies won’t have to go far offshore to find talent.
Planned initiatives by incoming president Obama and increased government spending on infrastructure projects also could lead to more domestic outsourcing, particularly for construction, real estate and technology, IAOP predicts.
Outsourcing destinations such as India and China will be challenged by the closer-to-home locations. Providers in these countries also will focus more on their own domestic operations.
# 2 – Global uncertainties will create outsourcing volatility
Overall, the fast-paced growth in outsourcing will slow in 2009, as companies lower their spending on information technology, consolidate or exit markets, and find more skilled labor available locally from layoffs in the financial services and other industry segments.
“In many ways, it will be the best of times and the worst of times,” says IAOP Chairman Michael Corbett. “In this turbulent environment, it will no longer be a rising tide that can lift all boats. Only the truly seaworthy will prosper.”
Global uncertainty and customers’ desire for immediate and guaranteed cost savings will lead companies to seek shorter outsourcing contracts that give them the ability to adjust volume and service level terms.
IAOP board member Atul Vashistha, chairman of neoIT, projects that companies will work with fewer key partners and want to pay less for services, noting rates have already declined by as much as 5 percent in many areas from just a year ago.
# 3 – Professional expertise will be valued
With companies putting a greater emphasis on immediate larger cost savings and lower risks, outsourcing service providers’ profit margins will be reduced.
“Service providers will find themselves being squeezed between lower growth, capitalization constraints and higher demands for cost savings, driving profit margins down,” said Corbett.
Outsourcing customers also will rely more on the expertise of outsourcing professionals in their own organizations to help manage the outsourcing process, putting pressure on advisors to demonstrate a higher value proposition.
“This increasingly self-service oriented customer model will be further fueled as more organizations implement outsourcing centers of excellence and as more professionals gain certifications,” said Jagdish Dalal, managing director, thought leadership, IAOP.
IAOP will continue to grow the ranks of certified professionals globally with its Certified Outsourcing Professional™ (COP) designation that demonstrates professionals’ expertise in the end-to-end outsourcing process.
# 4 – Strategic companies will prosper
The economic meltdown could create opportunities for strong, well-positioned companies, according to observations by consultants Booz & Co, a founding member of the outsourcing association.
“While the economic climate will not immediately improve, companies involved in outsourcing that act strategically and decisively for the long term will be increasingly valued and sought,” said IAOP board member SvenGovaars, senior vice president, Colliers Strategic Resources Group.
# 5 – Social responsibility and green will be outsourcing themes
New government direction under Obama could promote higher emphasis on socially responsible business environments, driving outsourcers to create solutions that address them.
IAOP predicts these will include employee retention and welfare programs that are industry competitive, as well as green operating environment for technology, real estate and manufacturing outsourcing service providers.
About IAOP
The International Association of Outsourcing Professionals (IAOP) is the global, standard-setting organization and advocate for the outsourcing profession. With more than 100,000 members and affiliates worldwide, IAOP helps companies increase their outsourcing success rate, improve their outsourcing ROI, and expand the opportunities for outsourcing across their businesses. To learn more, visit www.outsourcingprofessional.org.
Media Contact:
Michael Forbes
IAOP Communications Manager
(845) 452-0600, ext. 118
mike.forbes@outsourcingprofessional.org
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