Saturday, January 9, 2010 |
Outsourcing in 2009 will be remembered as having among the most compelling stories and most significant game-changing trends. As we welcome 2010 and the challenges ahead, it is important that we also review the preceding year and highlight some of the twists and turns that contributed to the maturity of the ever-complex outsourcing and offshoring industry.
2009 will be most remembered for what has littered the content of almost every business-related blog that was posted throughout the year: you guessed it, the global recession. Prior to the low season that hit in around Christmas of '08, the outsourcing industry had been developing initiatives geared towards innovation and quality high-end services. At the time, the Philippine BPO industry had established itself as the fastest growing in the world – with its Knowledge Process Outsourcing subsector experiencing 200% growth. The weight of the recession meant that affected businesses needed to have more for much less - as a result, cost-effectiveness came marching back to the forefront as the main driver for prospective buyers in the industry.
The stagnation in growth was aggravated by the billion-dollar Satyam scandal early in the year which delivered a huge blow to global confidence in the outsourcing industry. It also signaled rival outsourcing destinations to start closing the gap on India's position as the leading outsourcing destination.
The environment of uncertainty and hardship caused existing outsourcing relationships to either downsize or become severed altogether. At the same time however, the industry saw new entrants that had previously not considered outsourcing an option. CPG, retail, logistics and media and entertainment are examples of industries previously alien to outsourcing.
2009 saw captive centers wane as businesses realized the benefits of third party services, its low costs, and administrative capabilities. The demand for a higher level of control and risk management resulted in innovations on the part of providers in both service delivery models and technology. A product of this is the development of Software as a Service (SaaS) which has caught the industry by storm.
Service providers and governments rose to the challenge in 2009 as businesses began to see the benefits of outsourcing in both good and bad times. This resulted in the births of new locations in tier 2 cities worldwide as well as the geographic expansion of providers to meet the globalized agendas of outsourcing buyers.
In a nutshell, we could say that the recession and barrage of challenges in 2009 (not the least being anti-outsourcing initiatives in the US and Europe) necessitated many new innovations that has provided an exciting new platform for growth in 2010.