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Dec 14, 2008


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Thanks Phil

Please see my list of '09 predictions on my blog.


Hello Phil,

Please consider TEAM International's early predictions on IT Offshore Outsourcing in 2009 based on company experience and publications by Information Week, Info-Tech, Wall Street Technology. You can find a few more Industry Reports on the dedicated page of TEAM International's web-site.





I guess you have covered it well. Clearly, survival of the fittest..

Looking ahead & beyond 3-6 months, the focus will also move from arbitrage to gradually more innovative & deeper business impact outsourcing solutions...

Some customer segments ask for more specific domain capability....

Potential interest for recent trends in services - such as growth in SaaS models, shared risk models in outsourcing arrangements, one to many, etc. will grow...


Manish Mehta

In today's environment, where companies are going bust, money is king. and guess what guys, anything that saves money is going to work. If anything offshoring will increase, as opposed to the huge set of people onsite which will decrease - its happening already, see whats happening in Infy/ Wipro/ HCL

Political aims are all very well, but companies have to survive first, they can only give employment if they survive. Remember there
was a hue and cry over some Middle East investments a few yrs back into a US port (dont remember which one), whereas in 2009, we have major investments in the top financial global firms from Middle East/ Far East/ APAC and not a squeak.And would you say Goldman/ Citi/ BankAm have more influence or the US port ?

Surely this tells us that (1) this is being allowed to happen notwithstanding anything else (2) the investors now in are there because they believe in global models, and they now control a lot more than before.

Roopesh Kumar


There are different views on offshoring. Sheer survival is forcing some CEOs (especially for SMEs) to reduce costs and hence consider offshoring. Building stronger capability in product/service offerings today - which can satisfy the pent up demand of the market when it comes back, is also a key factor - a balanced in-house/offshoring strategy is being considered in this scenario. Then there are companies for which offshoring is just a No-no based on past experience, local and political factors.

There are skilled people available locally at wages far below normal, this is going to be a significant competitor to offshoring. If anything, the current environment will drive more rationalization into the offshoring process from business case right through to governance.


I agree with some of your observations. However, let me present the entire recommendation set and then see if you need anything more:

a. Consolidation: A lot more captives who have been in the market would reach a deal price targeted by cash rich outsourcers. However, I am still a votary of Captives so I lean towards more of the joint investment captives. After all, if these were efficient and good sources of Cash for a sale you can do better in a multi-step sale so some will definitely hang on to a part of their investment in the captive for a "better tomorrow"

b. People Sensitive Processes may not be Offshored: I see a lot of positive noise for Obama and he is likely to use the "long winter" till mid 2010 to bring in the tax benefits for the mid market companies looking for cost savings. A couple of HRO deals have already gone back and this may set a precedent ( It happened after the Halifax - Bank of Scotlad merger as well ) for some more to take preventive proclamations to avoid outsourcing of visible departments.

c. IT Budgets will ensure that the downturn leads to more applications and RIM outsourcing as possible ( No servers, but no IT departments onsite please - it's too expensive)

d. Financial Services space seems to have left the discussion table on Outsourcing topics, but this is likely to remain a mirage for Outsourcing baiters as Financial Services Companies still have stable outsourcing models ( Captive, third party, challenger, Virtual Captives) No additional business is likely to go back from already outsourced projects, processes or departments

e. Axon deal will set a precedent for further "upcountry" and "upsizing" moves but only for pioneers like HCL and maybe Infosys

f. Vendor Map - IBM and Accenture will continue to do well with existing business but vanilla outsourcing is likely to remain the flavour for most companies and thus there will unlikely be any significant evolution in the vendor map this year with outsourcers continuing focus on keeping it private and uninviting transformation or other "experiments", Ys that would enable pure scale plays. So will platforms. However, new platforms are unlikely to make any headway and the IT BPO combinations would stay with players with an established product and no need to price it to 90%

g. (And unfortunately the toughest one) Sales and Marketing budgets of Outsourcing vendors are unlikely to see many dollars in 2009. Thus, overall buyers would have to depend on what they already know from the public space to make their decisions. This will thus continue to have repercussions on the no. of deals that are seen as successful in execution.

h. I am afraid I can't see how retail and logistics will convert their plans for cost savings from Offshore this year unless they are already planned and ready with the processes and the platforms that will move.

i. Entertainment outsourcing is likely to come out strong with maybe even a ten-fold increase ( on the current small base) within the year.

j. Process standardisation drives at Fortune 100 companies are likely to stay away from the limelight and unavailable for vendor participation.

Best Regards

Hi Karen,

Thanks for the kind words. I expect Barack to incent US firms to create US jobs, largely through tax breaks, than penalize them for offshoring. We need our businesses to be competitive and embrace global delivery - both in the US and internationally.



So refreshing to have someone talk about what is *really* happening in the industry. I wonder how much Barack Obama will impact offshore strategies in light of the accelerated downturn? I suspect he may have other overriding concerns in the coming months to help businesses, and delay introducing preventative measures - what is your view?



My add- on from HR perspective in addition to your views:

*Getting Extraordinary Results from Ordinary People.

*We will need to ask if there will even be a role for Human Resource in the 21st century or whether HR will exist in a recognizational form.

*HR will need to be able to add significant and mesurable value to the bottom line of the organisation.

*HR strategies will need to siginificantly ehnance competative advantage,not simply that they are efficient or 'best-in-class'

*Operating a HR function globally which aligns with business models that will be required in future...

* Globalization to be the greatest single challenge that will be faced by HR professionals over the next century.

*Outsource outsource outsource......operational work.

Malvina Ashok

The coming year would see a cautious wait and watch policy by most firms. The out sourcing trends I see so far emerging is the increse in the number of pilot projects just to test the waters before any firm decides to out source major chunks of work.

The pilots are replicas of the main work though they are much more scaled down and last anywhere between 12-15 weeks.

The out sorcing on the non core businesses would continue but core businesses would continue to be out of this bucket, with incresing instances of staff augmentation to compensate for any lack of skill sets at the firms.

Vikram Venkateswaran


Looks like you have taken the words out of my mouth from a white paper I did back in August, a presentation that I did in October (Shanghai) and an updated presentation at our C-Level workshop in Beijing and Quandao this week.

I hope that our predictions are true and that this will result in positive effects for both suppliers and the buyers who so greatly need expense relief & bandwidth expansion.

- Jerry

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