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Outsourcing Spending to Increase as Economy Recovers

by: Karen Cayamanda

Wednesday, March 17, 2010 |

Global Outsourcing Industry to Spend 7.3% More

Results from the recent Gartner survey show that 85 percent of organizations expect that their outsourcing spending, specifically on IT services, will increase or stay the same this year as the economy bounces back from the crisis. Of the 1073 survey participants from different companies and organizations across the US, Europe, and Asia-Pacific, 76 percent are confident that the economic conditions will improve in 2010.

Gartner added that the overall mean outsourcing spending is estimated to increase by 7.13 percent, though it may differ in other countries. For instance, India expects a 17.4 percent increase, while Japan predicts a 1.5 percent decrease.

According to Gartner vice-president Allie Young, the economic crisis had an effect on the decision-making process of companies. "The impact of the global economic recession in 2008 through 2009 has been significant, in some cases radically changing a vertical market or a company's competitive position. Buyers of services have been impacted in many areas, making them more cautious regarding IT spending," Young said. While the economic uptick will result to an increase in outsourcing spending, Young noted that service providers must remain flexible in adapting to economic changes and focus on cost-effectiveness.

This is definitely good news for service providers. In the Philippines, the business process outsourcing industry expects rapid growth in the first six months of 2010 as companies plan to expand their operations. BPO firm StarTek, for instance, is planning to hire 1000 workers as part of their expansion plans in the country.

Moreover, this growth is seen not only on voice-based work but also back-office functions and higher-value outsourcing services. It is reported that the Philippine outsourcing industry is now tapping services that require managerial skills, analysis, and decision-making functions. With the way things are going, companies are confident that the impact of recession will eventually be a thing of the past and continuous growth will be seen in the global outsourcing market.

 

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