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There's not much else we can say beyond the fact the impact of the Paradigm Shock on the IT and business industry is seismic. Suddenly, the core value of services is to address what customers have to buy right now... and at prices they can afford. This is a cut-throat market unlike anything we have seen before and the survivors are those who have the nerve, the cash, the luck, the immediate ability to support their clients and the strategic nouse to make quick moves to come out on top as the new business environment gradually unravels:
Forecast Assumptions
The Bottom-line: Recessions do end, but this one is going to reshape the services industry more than anything we have ever experienced
We've ridden the traditional services model for 20 years and - let's be brutally honest - while we've had some awesome developments in areas like digital technology, cloud and automation, the underlying way services have been bought and sold hasn't fundamentally changed. Suddenly many clients facing huge survival challenges (such as in travel and manufacturing sectors), coupled with the downward pressure on pricing is sending large parts of the services industry into a tailspin. For those that don't have the cash reserves to weather this, and fail to reinvest in a plan to attack growth opportunities as the crisis subsides, the future is murky. Customers will demand "as-a-service" offerings, sweetheart deals and all sorts of outcomes in the market that is to come... the old rule-book is being tossed and the emerging situation is putting unprecedented (there, I used the word) pressure on many service providers to survive.
As the lockdowns slowly ease and business returns to a point where big deals can be done, expect some significant M&A activity - and all sorts of "carve-out" deals to take place - as service providers fight to survive, exit or dominate. We may even get a few surprise entrants into a market where there is no pre-written playbook. This is where the brave, the smart and the lucky take control.
Posted in: Business Process Outsourcing (BPO), IT Outsourcing / IT Services