The Forecast Looks Cloudy for Global Sourcing in 2011
Stan Lepeak, Managing Director of Global Research
EquaTerra released the results of its 4Q10 global Pulse survey via a webcast held on Wednesday, January 26th. As it regularly does in the fourth quarter Pulse survey, EquaTerra polled leading services providers and its advisors on what they projected as the most impactful trends in the business and IT services marketplace in the coming year. Service providers and EquaTerra advisors ranked how legitimately “hot” (defined as truly having a business impact on buyer organizations) they felt a predefined list of market trends will be in 2011, with a rank of one representing cold or little market impact and five representing hot or having a major market impact. Not surprisingly cloud computing was at or near the top of the list (see figure below).
Cloud computing overall was ranked as the top projected trend for 2011 by EquaTerra advisors, scoring a 3.86 on the one-to-five scale and rising from the number three spot last year. Service providers polled ranked poor economic conditions, debt crisis, etc. driving MORE outsourcing demand (i.e., to cut costs) in the top spot, while this trend was ranked sixth by advisors.
Global sourcing and globalization, the top identified trend by both advisors and service providers for 2010, fell to third and second respectively for 2011. This decline in part represents a slight slowing in the pace of globalization, as well as the fact that global service delivery has become commonplace and hence less a “hot” new trend. Advisors operating out of EMEA ranked global sourcing somewhat higher than those in the Americas, and advisors supporting BPO were the most bullish on globalization.
Both advisors and service providers were positive on the trend of using cloud computing in lieu of traditional outsourcing, scoring it at 3.63 and 3.32 respectively. This trend was more highly regarded by advisors supporting ITO than by those supporting BPO. This highlights the impact cloud computing is already having on buyers’ decision-making processes and the adoption and expansion models for traditional outsourcing.
Overall, offshore captives and the threat of protectionism leading to less outsourcing fell again in
importance and relevance as major outsourcing and third-party service trends(though for a certain type of buyers in certain industries and geographies these trends remain important). Social media/networks (e.g., Facebook, Twitter, YouTube) used for business purposes was identified as a relatively hot trend among service providers, but less so among EquaTerra advisors who are focused on social media’s usage to support sourcing efforts where it is less mature today than for supporting other business activities.
For further insight on trends in outsourcing, access EquaTerra’s 4Q10 Pulse Survey results at http://www.equaterra.com/pulse.
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In the way companies are conducting business today, there will always be a need for outsourcing. Although outsourcing may not be for all types of business. Eventually, companies will find a way to fit outsourcing into their business strategies successfully as what giant corporations have done successfully.