A year of change in outsourcing

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An incredibly dynamic and turbulent 2008 has come to an end. Now, all those involved in outsourcing are looking to 2009 and wondering what the next year holds for the industry.

I thought it would therefore be a good time to share with you a few of the NOA’s thoughts on what trends we may see in 2009.

With rising unemployment in the UK, companies may be reluctant to send jobs offshore in favour of outsourcing to within the UK. The UK economy is weakening and with the value of the pound continuing to fall, companies will not be able to see the same level of cost savings from offshoring that they have experienced in the past.

Also “patriotic” sentiments and rising unemployment will encourage UK organisations to seek out areas in the UK to site new outsourcing business or bring back poor performing operations.

This may feel good, but whether this is economically right of course entirely depends upon each situation. It may add to supplier woes, once end users start to bring work back to the UK. Offshore suppliers will see a loss of the economies of scale that made them initially attractive and therefore a rise in their own costs.

Whether onshore or offshore 2009 will see customers demanding price reductions which will mean existing suppliers are caught in a price trap.

If they reduce costs significantly the users will question the suppliers current/initial rates, if they stand firm then they risk being significantly undercut by competitors. The credit crunch will force management on both sides to focus on cost and suppliers will need to have innovative solutions to either maintain existing end users or competitively bid for new contracts.

ITO may also begin to change shape. 2009 will see ITO become less common, with more vendors beginning to focus on specific vertical markets and delivering services that directly cater to their customers business.

This will mean that end users will be able to take advantage of bespoke outsourcing services that work specifically in conjunction with their business practices rather than use a vendor which only offers a generic IT solution.

With these ideas in mind we can all expect 2009 to be a year of change. As always best practice should be at the top of all industry players’ priorities which will help to ensure organisations effectively and professionally adapt to new outsourcing trends.

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