Global Outsourcing Industry Outlook 2013

The current global volatile economic conditions and the European Sovereign Debt crisis is expected to continue in 2013. But Germany & France are actively trying to solve the euro zone crisis and there are some positive signs in this regards. But most of the companies across the globe are going to see weak and volatile demand conditions and companies have to expand even more into emerging countries other than the Brazil, Russia, India and China (BRIC). Growth for the companies lie in emerging markets other than BRIC countries and for companies to expand and retain their profitability is only possible by managing and reducing their costs and spends efficiently. Companies are looking at outsourcing vendors to actively partner with them and provide services that directly affect the business outcomes and the move towards outcome based pricing will continue in 2013 and even the outsourcing vendors are looking for outcome based revenues as it increases their margins. Outsourcing Vendors are also changing their organization structures, products and services portfolios and recruiting highly skilled and talented domain experts that help them in providing outcome based services to their clients. More over the emergence of technologies like cloud computing, Big Data, analytics, mobility and social media will also have a significant effect on the way the outsourcing vendors operate and provide their services in 2013. United States followed by Europe will dominate the outsourcing industry but the Asia Pacific particularly companies in Asian countries are increasing their outsourcing spends and this will be a significant change for the industry in 2013 which was initiated three years ago.

Outsourcing Vendors are also setting up centers and offering services from locations that are close to their clients. Most of the Indian Outsourcing Vendors have opened development centers in European countries like Poland, Latin American countries like Brazil, Argentina and expanding to other low cost destinations in Asia like China and Philippines. Indian outsourcing vendors have slowed down their hiring as the deals and the pricing mechanisms are changing and are aggressively focusing on nonlinear and outcome based revenues. Most of the outsourcing vendors globally have prepared themselves for the volatile and weak demand in 2013 and are developing strategies to overcome the difficulties as they did in the year 2012. The traditional stronger outsourcing verticals like Banking Financial Services and Insurance from which all the Indian Outsourcing vendors get more than 50% of their  revenues is undergoing some drastic changes that include regulatory changes has forced the outsourcing vendors to look at other verticals like Government, Healthcare, Telecom and the manufacturing vertical is seeing a resurgence. Cloud Computing, Big Data, Analytics, Social Media and Mobility are having a significant effect on the way the services are offered by outsourcing vendors and there is a lot of Mergers and acquisitions activity is going on involving the above mentioned emerging technologies. Outsourcing vendors are acquiring smaller companies that are offering the above mentioned services and integrate them into their core product and service offerings. But it will be a very challenging 2013 for the global outsourcing industry both in terms of increasing their revenues and profitability.