Exclusive: Outsourcing poised to rebound

By Phil Fersht

I wanted to share a few early snippets from our global sourcing adoption study, which we've been running over the last 2 weeks.  And thanks to Global Services Media, Vinnie Mirchandani, Jason Busch, William Mougayar and Dennis Howlett, who have all contributed in helping us reach close to 700 respondents, of which we had 127 enterprise buyers for IT, supply chain, finance, HR and other BPO services.

Here's the high-level view on where enterprise buyers will be investing / dis-investing over the next 12 months:

Sourcing plans over the next 12 months 

Key trends of note:

Applications outsourcing (AO) to resume similar uptake as pre-recession era, with 8% of buyers moving into AO deals for the first time.  42% if existing AO buyers will increase scope, with only18% decreasing.

IT infrastructure outsourcing shows a similar aggressive trend to AO, with a similar number increasing/decreasing scope.

Finance & Accounting BPO will resume it's pre-recession surge, with 13% looking to make their first venture in an F&A BPO model, 30% of existing buyers increasing scope, and only 17% decreasing.

HR Outsourcing will be more modest, with 10% looking at payroll-based HRO for the first time.  However, the same number of current HRO buyers that are increasing scope will also be decreasing.  Clients who have adopted HRO seem to be sticking with what they have already outsourced, as opposed to bundling more processes.

Procurement shows steady potential, though a lot less pronounced than F&A BPO, and KPO is being evaluated by 8% of buyers.  KPO seems to be more project focused still, which buyers working out what works as opposed to increasing scope at this stage.

Thanks to all of you who took the time to complete the study.  You will receive an article highlighting the main findings shortly.  Comments/questions always welcome.  pfersht@amrresearch.com

Comments

[Brian Ellis]

Thanks for sharing Phil. How do you see the impact of Obama's tax reforms impacting offshoring?

Brian

[Stephen Cohen]

Phil,

Interesting how the focus is always on eeking more and more cost from the IT function. The aggressive pricing from several of the Indian suppliers should offset these tax reforms and this data should stay accurate. Also agree it's the arbitrage-heavy elements of BPO, such as finance/accounting, which are going to increase. Wonder what Obama will think after another 10%+ of enterprises move into offshore-heavy deals here...

Stephen Cohen