According to research by the MetaGroup 'outsourcing within North America is growing at an average of 10%-15% annually. In contrast, offshore outsourcing is growing at a rate of more than 25%, while mainframe outsourcing is growing at less than 10%.'Datamonitor released a report in January that reveals businesses worldwide increased their IT outsourcing efforts by an alarming 44 percent in 2003. The EMEA (Europe, Middle East, and Africa) IT outsourcing market jumped 146 percent, from $23 billion in 2002 to $57.6 billion in 2003.
Yet the North American market in IT outsourcing dropped from $55.3 billion in 2002 to $55.1 billion in 2003. This trend may continue as government and state legislatures impose regulations against the outsourcing of government contracts.Dell Inc, the world's largest computer seller decided to shift its customer support work for corporate clients back to the US, in November.
In December, Lehman Brothers also decided to take back its internal computer help desk, which had been outsourced to Wipro, due to dissatisfaction with the skills offered in India. The threat to the BPO industry is generally seen as one of resistance in the developed world to jobs shifting to countries such as India as customers complain about the cultural differences and therefore lack of understanding.
But outsourcing will continue to grow. The economic benefits in terms of lower costs are so substantial that firms often cannot afford not to tap into the potential of India, China and other developing countries, even if it means some political backlash in the home country. Dissatisfaction with the quality of manpower in India in relatively less-skilled services could result in a move to other countries as competition continues to increase.
Arm’s-length supplier–customer relationships characterised by an over-arching focus on tight SLA-based contracts will still have their place – but these will focus on conventional, efficiency based outsourcing arrangements and contracts will be fought on the basis of price and quality.
Yet the North American market in IT outsourcing dropped from $55.3 billion in 2002 to $55.1 billion in 2003. This trend may continue as government and state legislatures impose regulations against the outsourcing of government contracts.Dell Inc, the world's largest computer seller decided to shift its customer support work for corporate clients back to the US, in November.
In December, Lehman Brothers also decided to take back its internal computer help desk, which had been outsourced to Wipro, due to dissatisfaction with the skills offered in India. The threat to the BPO industry is generally seen as one of resistance in the developed world to jobs shifting to countries such as India as customers complain about the cultural differences and therefore lack of understanding.
But outsourcing will continue to grow. The economic benefits in terms of lower costs are so substantial that firms often cannot afford not to tap into the potential of India, China and other developing countries, even if it means some political backlash in the home country. Dissatisfaction with the quality of manpower in India in relatively less-skilled services could result in a move to other countries as competition continues to increase.
Arm’s-length supplier–customer relationships characterised by an over-arching focus on tight SLA-based contracts will still have their place – but these will focus on conventional, efficiency based outsourcing arrangements and contracts will be fought on the basis of price and quality.