Outsourcing: A lot in store for 2010


It’s the time of year again where Christmas-addled sourcing professionals come up with their thoughts on the coming 12 months.

Predictably, the sourcing industry’s would-be fortune tellers have been busy, with tens and twenties of forward thinking releases hitting the NOA’s newsdesks in the last week.

Add our own member’s predictions to the pile and it makes some interesting reading. Without further ado I thought it best to give a quick rundown of the most promising predictions.

Top of the list is the public sector’s impending behemoth of a challenge; to cut costs everywhere and help claw back the government’s huge budget deficit. The sector’s ability to cut costs by traditional means, such as staff cuts, is limited, so sourcing and shared service arrangements will come as a matter of course.

This prediction is starting to come true right from the word go, as Lancashire County Council has just announced a new £1.9bn shared service project. We expect many more to come.

Next up is the growth of green technologies and ‘green sourcing’ arrangements. Though global leaders failed to reach a consensus in Copenhagen, there are some promising noises coming from the business world that give cause for hope.

There are scarce few outsourcing contracts that go through nowadays without taking into account some measure of supplier ‘greenness’. But this year will see green embedded further and deeper into sourcing than ever before. The NOA predicts a more concerted move to understand what ‘greenness’ actually means in sourcing, and has also launched its Green Steering Committee, to help guide the industry.

Likewise, 2010 will also see more innovation in green services and products that impact an organisation’s green credentials. Legislation such as the CRC, though it has some interesting side-effects on sourcing, provides new BPO opportunities.

FirstCarbon, a subset of ADEC launched last year, is an early mover in this space. The company has seen the opportunity to use its BPO processing capacity to carry out ‘carbon accounting’. As companies race to work out, and reduce, their overall carbon footprint, such services look set to become increasingly popular.

On another positive note, most signs point to economic recovery for the UK early this year. This of course depends on a personal level of optimism versus pessimism and whether you believe the naysayers or not.

Personally I’m prepared to go with the popular opinion of recovery, especially as it means good things for outsourcing. Vendors should be especially happy as their clients stop asking for reductions and look towards expansion of capacity to support renewed growth.

Of course, what the NOA says isn’t everything; there are also some very interesting predictions coming from other industry voices. For example SLASSCOM’s, the Sri Lankan equivalent of NASSCOM, research finding that one in ten SMEs are very likely offshore this year.

TPI, the sourcing advisory firm, also expects growth in larger contracts (over $20m) as decisions put off during the recession are finally taken. Location-focused predictions back China as a growing call centre player, the Philippines and Russia to increase their prominence on the world stage and Brazil to take a bigger role in global ITO despite increased competition from Chile.

Phew! There’s certainly a lot in the pipeline and it should be an exciting year. It looks like 2010 will be a game of two halves for outsourcing.

On one hand we see optimism rising in the private sector with companies using outsourcing to seize growth opportunities and re-skill with minimal risk.

But on the other we see what amounts to a public sector recession wreaking havoc on those people and organizations in charge of public service delivery. Either way, outsourcing and offshoring can, and will, be used positively in both respects, so you can expect sizeable sector growth across the board.

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