Projected Trends in Global Sourcing
There is a lot of speculation as to what the coming months will bring for the global sourcing industry. According to Gartner, a research analyst firm, spending on offshore IT services is expected to grow 40 percent in the United States and 60 percent in Europe in 2008. The big question is what new trends will occur among global sourcing?
More companies will begin to send work to countries other than India. For the past several years, India has been the leading provider of global sourcing. While this country is expected to remain in the lead, there are more challengers in the industry. The IT market in India has been impacted by wage inflation, shrinking pool of talented professionals and infrastructure issues. It is likely that global sourcing providers in Latin America, China, South Africa and Eastern Europe will attract more IT business.
Global sourcing providers will consolidate. Competition in the outsourcing market has become fierce. The leading IT service providers are expected to consolidate by purchasing smaller competitors in the industry. There is speculation that the number of mergers and acquisitions will continue to go up and there will consequently be a smaller amount of suppliers for buyers to choose from.
Remote infrastructure management (RIM) outsourcing will grow. RIM refers to managing servers, applications, networks and databases. This market is estimated to grow 60 to 70 percent in 2008. RIM outsourcing is considered to be an asset-light deal and provides a lower cost infrastructure for the outsourcing company. Traditional infrastructure outsourcing will start to decline as RIM outsourcing grows.
There will be a greater demand for high quality work and more services. The focus has been on cost reduction, but more outsourcing companies will be putting an emphasis on high quality work and additional services. Outsourcing companies will be looking for better talent, expertise and flexibility from the global sourcing providers. There will be a bigger demand for higher-value work including process improvement and application portfolio rationalization.
Green outsourcing will become more popular. Environmental concerns are growing and corporations are requiring that suppliers adopt green policies. The Brown Wilson Group conducted an independent study of 20,000 outsourcing users. According to the survey results, 43 percent of outsourcing companies said 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 spotlight on environmental concerns could force global sourcing providers to develop eco-friendly processes and policies.
A&E Consulting will make global sourcing work for you. We will assist you in choosing the right global sourcing partner and establishing the business relationship. In addition, we will manage the first outsourced project to make the transition as smooth as possible.
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