Faced with a slow economic recovery IT leaders will continue to outsource in order to facilitate cost-savings. The market will also experience a surge in smaller IT service deals from first-time buyers.  Cloud sourcing which has often been predicted as the death of outsourcing, will soon merge with the existing outsourcing market and provide better opportunities for the entire industry. Infrastructures supported by cloud resources and based on SOA principles will encourage smaller outsourcing providers, which will in turn energize the outsourcing market by heightening competition and lowering prices. Industry experts predict the emergence of a Latin America outsourcing boom especially in Brazil, Mexico, Chile, Colombia, Costa Rica and Peru. Service providers will also continue to shift their delivery centers to markets such as China, Philippines and Egypt, since these countries represent big markets with big demand for transformational and discretionary spend activity.  More cross-border partnerships are expected in the future as cash-rich provider firms from developing nations are more than willing to invest into mid-market domestic provider firms in the US. The outsourcing industry will witness mergers between major Indian IT service providers and U.S.-based outsourcers, with the Indian companies on the buying end. Industry experts have predicted the stabilization of pricing structures in the coming years, as vendors will have to woo clients with performance rather than a low bids. With the huge pressure to keep costs down, service providers will rely more heavily on mass automation tools that will create additional opportunities and reduce the staff necessary to support critical business applications. The outsourcing industry will experience more companies coming up with comprehensive strategic plans that combine multiple processes in their outsourcing initiatives rather than outsourcing single processes or functions on a stand-alone basis. Industry experts also predict the emergence of a retail model in the outsourcing industry where service providers will be categorized into large operations offering reduced costs and middle- and lower-sized providers providing more customized service. IAOP’s Global Outsourcing data reported a 10% growth in the revenue of outsourcing service providers in the year 2010. This growth is expected to continue in the coming years. The future will experience an increase in multi-sourcing arrangements caused by socio-economic pressures on leading countries and economic incentives provided by local and federal government to encourage employment.

India’s role in the outsourcing industry

Industry experts have predicted that despite increasing competition from other offshore outsourcing destinations, Indian outsourcing firms will still occupy the headlines as the world leader of outsourcing in the coming years. This is because its advantages over other regions still remain distinct. However, the Indian outsourcing industry will experience a significant change in the near future, with companies shifting to knowledge-intensive and value-added services that call for a new way of functioning. Unlike in the past, it is no longer labor or cost arbitrage that drives the domestic BPO market. The new verticals that make India stand out in the global outsourcing market are the need to scale rapidly, greater focus on core competencies, enhanced productivity, heightened competition and the reduced time to market ratio. Outsourcing service providers are now adding the knowledge component into the mix in an attempt to deliver greater value to their customers overseas.