by: Ronald Escanlar
Friday, August 12, 2011 |
Outsourcing advisory firm TPI has released its Momentum Market Trends & Insights 2011 Verticals Report, which surveyed outsourcing trends in 27 vertical and 68 sub-vertical industries last year. The study found spending for outsourcing across the surveyed industries rose by 5%, but spending per industry was highly variable.
The following are the report’s highlights:
Outsourcing spending among Forbes Global 2000 (G2000) companies has increased. Over $72.1 billion was spent by G2000 companies last year for outsourcing services, amounting to a 5% increase. Manufacturing and Financial Services accounted for the most spending, but the Retail sector had the highest growth rate at 37%. The growth was attributed to increased IT spending as new retail business models emerged.
Increased outsourcing deals among G2000 companies. Overall outsourcing penetration among G2000 companies rose by 3% as more companies signed their first outsourcing deals last year. Twelve out of 27 vertical sectors had at least 20% penetration.
Outsourcing momentum led by sub-verticals. Outsourcing activity shifted to sub-verticals as spending on outsourcing declined on the main verticals. Outsourcing spending in the Chemicals industry flat lined, but the sub-vertical Life Sciences increased outsourcing spending by 30%. The Business Service & Supplies industry plateaued, but its Finance Services sub-vertical increased by 15%.
Increased outsourcing activity in specific verticals has shifted the Hunting-Farming dynamics. Opportunities across the 27 industries being tracked by TPI are measured through the TPI Hunting-Farming Index. In the 2010 Farming Index, the Utilities and Retailing industries boosted their ratings from medium to high as outsourcing spending among these companies increased.
Vertical trends have been positively affected by the market’s fast growth. Outsourcing penetration has increased significantly among larger firms compared to small companies in majority of the industries surveyed. Most of the new outsourcing growth happened in companies ranked 501-1,000 in the G2000.
As markets recovered last year, the survey revealed which among the vertical industries surveyed offered the healthiest opportunities for investments. Outsourcing spending was indeed not constant across sectors, but the data will help in choosing the correct strategies for outsourcing.