EquaTerra 3Q10 Pulse Survey Results – Global Sourcing: Alive, Well and Growing
Stan Lepeak, Managing Director, Global Research
EquaTerra recently released the result of its 3Q10 global advisor and service provider Pulse survey. While results were mixed to positive relative to the overall growth of business process and IT outsourcing they were clear on continued strength of the offshore and global services market. Despite the pressure for increased service trade protectionism among many in Western governments and general anti-globalization saber rattling, the use of global sourcing and service delivery models remain strong. We saw similar results in EquaTerra’s European ITO service provider performance and satisfaction studies.
In our 3Q10 Pulse survey, we polled service providers and our advisors on what impact various current market conditions are having on buyers’ global sourcing preferences and patterns (see figure below). We asked advisors and service providers to what degree they agreed or disagreed with five positions related to trending in global sourcing. They ranked their responses on a one-to-five scale where one represents strongly disagree and five means strongly agree. The only trend with consensus agreement, and it scored just above the mid-point, was that outsourcing buyers are growing more interested in offshore services delivered from locations other than India. This trend is natural as the number of quality and viable global sourcing locations expands and Indian service providers themselves diversify delivery capabilities beyond their home market. Neither advisors nor service providers see as a major trend buyers pulling back from global sourcing in general or in their use of India-based service providers. When we last asked these questions in our 3Q09 Pulse survey, similar results emerged.
Market Conditions: Impact on Global Sourcing
Current economic conditions are clearly impacting buyer demand levels and usage patterns for global service provisioning. Impact drivers include changing market economics, such as exchange rate trending, the reemergence of rising wage levels and higher attrition rates in offshore markets, and the increase in surplus labor in Western markets. While buying patterns are changing and include the use of more local or nearshore resources for certain services, overall, the growth of global sourcing continues relatively unabated.
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