Offshore Outsourcing Global Trends For Year 2009

Offshore Outsourcing Global Trends For Year 2009

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The global economic market is in turbulence, the ripples of which would be felt for quite sometime to come. Financial crisis and recession that are on the peak now will roll over into the next year as well and will make global outsourcing a strategic business tool. As organizations battle the economic adversity, offshore outsourcing will find many patrons. Here are some possible trends that may be seen by the industry in year 2009

Slowdown of Globalization

Globalization will continue but slow down its pace in the upcoming year. The prime factor that contributes to this is the global economic downturn. In addition commodity prices have collapsed tremendously and this would affect market economies in a big way. And to top it all, the new U.S. president, Obama plans to cut down tax breaks for companies that outsource their processes to offshore boundaries and give them to companies who seek to keep jobs in shore. His policies aim at cutting down outsourcing at large and stimulate job circulation within home turf.

However, the business benefits of outsourcing will outweigh all the repressing factors and steer ahead globalization.

Change in Outsourcing Strategies

Due to the current economic scenario, companies will increasingly favor cost reduction. And cost avoidance will be one of the prime governing factors that influence the choice of a service provider. They will analyze all the possible aspects and select the most cost effective option for them.

High Quality Standards

Even tough economic turbulence would prompt companies to adopt increased offshore outsourcing measures, the criteria of choosing a service provider would be even stringent. To bloat their leaning profit margins, they would try to extract maximum from the outsourcing relationship and focus on high quality standards. Also capacity levels and prior experience with service provider will be an added benefit.

Volatile Foreign Exchange Markets

Fluctuations in currency prices will be a major concern in the outsourcing deals. Outsourcing companies and service providers will have to strategize the specifications of the same well before hand to avoid any loss of profits later. Not only do currency fluctuations affect the emerging markets but also, they create instability in the cost structure of outsourcing projects. For instance, a decrease in dollar rate often signifies losses for local currencies and subsequent losses for the service providers of the countries. The best way to deal with value discrepancies and pricing issues is to convert the project cost into local currency figures and designate an amount based on that.

Wage Inflation in Offshore Countries

Salaries and wages in offshore countries will decrease towards next year, at least for a certain period of time. This is because the foreign markets will take time to adjust to the credit crunch and turbulent economic environment and therefore will take time before they make use of outsourcing as an essential business strategy. Even after that, since cost will be a factor for choosing a service provider, the one with lowest bid will get awarded and thus if price being paid is less then how wages can be more! Therefore the wages of employees at the end of service provider’s will go down or at least fail to increase.

Increased Competition amongst Service Providers

Because cost cutting will be prime factor to influence the choice of a service provider, there will be more and more outsourcing vendors entering the market and offering services at competitive rates. This will lead to increased competition amongst service providers to clinch outsourcing deals.

About the Author:
Maneet Puri, Director of LeXolution IT Services, a premier brand in the offshore outsourcing company in India. His company provides an extensive range of unique as well as regular KPO services right from internet market research, virtual personal assistant to regular data processing and management services.



Article Originally Published On: http://www.articlesnatch.com


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