Outsourcing Trends – 2006 and Beyond
Recent reports from TPI and DiamondCluster pointed out to the declining TCV (Total Contract Value) of the outsourcing deals seen this year. The contention is that outsourcing has platued and onshore outsourcing service providers need to re-invent their model to survive the changing trend in the industry. The biggest contributor has been F&A functions and we will see offshore providers gainingmarket share at the expense of their onshore peers.
But the sheer large-enterprise focus of these research reports makes me think about the validity of extrapolating these trends to the whole industry as such. I believe that large enterprises lead the way in outsourcing and the SMB segment follows. If this is true, then what was true for outsourcing in general 2 years back, should hold true for the SMB segment in the near future. How is that for a simple trend forecast?
Does that mean that we will see a flood of outsourcing deals from mid-market firms next year? Should outsourcing service providers reach beyond the low-hanging fruits and pitch outsourcing as a strategic initiative rather just a cost-cutting move?
