Factors Fueling the Growth of Outsourcing
/The outsourcing research firm EquaTerra has new research on the factors fueling the growth of outsourcing services. The study cites four primary factors:
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Weak economic indicators: Although expense reduction isn’t the only driver for outsourcing, many organizations are reemphasizing outsourcing to increase their bottom line
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New functions outsourced: Buyers are focusing on new and growing areas like legal and knowledge process outsourcing, document and electronic records management, industry specific offerings and knowledge intensive services
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Service provider readiness: EquaTerra advisors are seeing some improvements in overall service provider capacity, in part driven by improved pricing and contracting terms
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Smaller, more numerous deals: The outsourcing market continues to evolve with more but smaller deals spread across a greater number of service providers and delivered on a more global basis
There's no doubt in my mind that offshore outsourcing will continue to grow as a result of the desire to reduce costs. This will be especially true if the U.S. slips into a recession. The other point made by EquaTerra that confirms my own experience is that companies continue to look for additonal processes to outsource. It's a natural evolution for companies to look at more complex processes, such as legal and other types of knowledge work, once these companies realized the benefits of their initial outsourcing efforts and become more comfortable with a delivery model that includes offshore outsourcing as a key component.
