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Economic Concerns Likely to Affect Outsourcing Demand

by: Karen Cayamanda

Thursday, September 8, 2011 | Outsourcing News |

Market Uncertainties to Affect BPO Activity

While it is too early to say what the impact of the current economic situation will be, analysts believe market uncertainties may affect the demand for outsourcing.
Krishna Baidya, Industry Manager for Asia-Pacific ICT practice at business research and consulting firm Frost & Sullivan, said the global outsourcing market may not be that stable and businesses would reevaluate their outsourcing relationships, halt making decisions, and be watchful on the state of the economy. 
When it comes to service providers, they will likely go for smaller and shorter outsourcing contracts and deal with inquiries from potential clients on how to get more at a lower price. Baidya also said getting more value will make businesses outsource work to service providers that can give them long-term business and financial benefits.
According to Baidya, innovation and consistency in service offerings are crucial to stay competitive at this time of economic uncertainty. Meanwhile, Principal Analyst Jens Butler of global analyst and consulting firm Ovum said service providers in Asia are becoming less reliant on the Western market and are now tapping markets closer to home. Liu Chu Tzer, Senior Vice President and Managing Director at HiSoft Singapore, said less dependence on the US and UK markets is crucial in establishing a more diversified company portfolio and keeping businesses insulated from the impact of an economic downturn.

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