Predicting what will happen over the next 12 months is never easy - but here are the main topics I expect to be hitting the outsourcing headlines in 2011:
Perhaps the most predictable ‘prediction’, is the colossal challenge faced by the public sector.
The Coalition Government has attempted to redesign how our public services are run to make them more cost-effective. Its decentralisation of powers means that local authorities must engage with communities, social enterprise and the private sector more effectively. The Chancellor has also asked councils to question whether non-essential services can be provided by a third party, thus helping to sustain services but reduce costs.
The sector's ability to cut costs by traditional means, such as staff cuts, is limited, so sourcing and shared service arrangements will come only as a matter of course. Many councils have already begun materialising the cuts, and while Suffolk County Council seemed to be the first to take the hit, by slashing its £1.1bn budget by 30% through outsourcing almost all its services, I’m sure we will see many more following suit.
Cloud computing is the ‘IT’ word of the moment - literally!
Cloud brings together trends in both technology and IT operations and with both Business and IT decision-makers expecting to allocate 30% of their IT budgets to the Cloud over the next five years, it is going to demand new IT and business operating models and radically different sourcing mind-sets from CIOs and business function leaders.
This year we will continue to see amazing new offerings from companies that create services based upon cheap and scalable infrastructure. The ability to access business applications quicker, faster, cheaper and in a virtual business environment are the major drivers.
As awareness of the Cloud as a business platform increases and as the functioning feasibility of the Cloud is confirmed through increased adoption by businesses, the Cloud will serve as an additional driver for further growth in the outsourcing space.
Further, and as price points for entering the Cloud become more attractive, we should witness Service Providers increase Cloud based offerings - expanding existing delivery platforms.
Near-shore. On-shore. Best-shore?
2011 will see economic and political phenomena contributing to the growth of nearshoring and onshoring locations. This trend will continue to gather steam as it seems the ‘offshore train’ left the station several years back.
End users will be increasingly outsourcing to destinations in Central and Eastern Europe or even within own country. Factors that will be driving the choice of nearshore outsourcing in 2011 are:
- geographical proximity
- Strong R&D potential
- Strong language skills
World Domination: Made in China
Last, but not least, China’s outsourcing industry seems to be progressively closing the gap between itself and the perennial leader India. With the China slowly rearing its outsourcing head, it seems fairly obvious that the country will forge a ‘local’ presence and potentially purchase a major outsourcer in Europe. World domination is not quite happening just yet, but it’s unquestionably on the horizon.
One thing is for sure - 2011 is sure to be a busy year for everyone with a vested interest in outsourcing!