Executive View - Trends in the Global Outsourcing Market

Executive View - Trends in the Global Outsourcing Market

Competition

Outsourcing companies are faced with a number of challenges in the year ahead. First of all, just like many businesses in other sectors, service providers are forced to find solutions to a great dilemma: rebuilding margins while reducing costs. The need to win new contracts and to cross sell more services to existing clients is also essential. The main reasons for contract terminations were unrealistic client expectations and the lack of a client outsourcing strategy. Also, an increasing number of customers are unwilling to enter into long-term arrangements with outsourcing service providers. Providers need to convince them that the potential risks of outsourcing can be mitigated through a tight management process and contractual safeguards.

Another major challenge for outsourcing is greater competition from new market entrants. Although India remains the leader, other emerging economies are seeking to expand into the sector with new market entrants from areas such as China and Asia, Latin America, Eastern Europe and possibly Egypt and the Middle East in various service areas. Finding ways to remain competitive will therefore be a key challenge for leading outsourcing companies in 2010.