Global Outsourcing: A Growing Global Phenomenon


Global outsourcing experts expect growth of 8% for 2009 outsourcing operations as Service Buyers continue to favour smaller service contracts. Analyst house Gartner forecasts the ITO and BPO industries to return to a healthy level of growth during the 2010 fiscal year. The smaller project size often results in splitting service contracts between Service Providers in several countries. The shift from large high-value deals is the primary cause of the 50% drop in the value of BPO and ITO contracts in 2008.

Offshore expenditures in the United States is 3X higher than Western Europe, however the gap is closing. Indian providers continue to capture a larger portion of the market share and encompassing 40% and 60% BPO and ITO for US & Europe markets respectively. Service Buyer BPO maintains a priority for increasing ROI. In most situations, firms outsource the processes that are redundant or fall outside core business operations. HR (human resources) outsourcing is an area that has grown significantly in popularity; according to a study, SMEs lose 25% of operational efficiency as a result of in-house HR operations.

By outsourcing HR, firms can capitalize and allocate in-house staff time towards high ROI functions and developing core competencies (ROI-emphasis). The savings achieved with outsourcing include cost savings in office space, tax remittances, salaries payments, staff benefits, holiday pay, and staff training.