{"id":1580,"date":"2010-12-09T07:45:00","date_gmt":"2010-12-09T07:45:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/2011-outsourcing-predictions_120910\/"},"modified":"2010-12-09T07:45:00","modified_gmt":"2010-12-09T07:45:00","slug":"2011-outsourcing-predictions_120910","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/2011-outsourcing-predictions_120910\/","title":{"rendered":"And here are… HfS’ 2011 Outsourcing Predictions… on demand"},"content":{"rendered":"
\"\"<\/p>\n

Larry King to come out of retirement for HfS?<\/p>\n<\/div>\n

And here we are, like clockwork, \u00a0jumping on the tackiest, lamest marketing exercise every analyst, consultant, CEO, and wannabe thought-leader always persists in doing… because you are supposed to gasp “Wow – they are predicting the future!”<\/strong><\/p>\n

Firstly, on behalf of HfS, I would like to personally apologize for jumping on the predictions\u00a0sausage-factory (like we do every year). \u00a0In fact, someone has probably designed a software package that automates predictions. \u00a0In fact again, some provider probably runs a “Predictions on Demand” service that underpins the predictions-generating software with a KPO service that customizes your predictions for you;<\/p>\n

Secondly, unlike all the other predictors this year, our predictions will automatically expire on 2nd January 2011, so they will no longer be valid, and will simply become an embarrassing attempt to sound impressive, while grossly misrepresenting reality;<\/p>\n

Oh, and thirdly, here are our Predictions:<\/em><\/p>\n

1.\u00a0 The outsourcing industry will see the first Cowboy and Indian mega-merger<\/span><\/span><\/strong><\/span><\/span><\/p>\n

In today’s market, the Western providers have been forced to bring their costs in line to be competitive with lower cost offshore-centric Indian service providers, by expanding and optimizing their offshore\/nearshore operations.\u00a0 Both the traditional Western providers and the newer Indian breed can offer low-cost services to take on new business.\u00a0 It\u2019s not really about cost anymore, though, as several Indian-headquartered providers continue to gain marketshare in this environment as many outsourcing customers are fond of their work culture.\u00a0 However, many sourcing managers, a rung down from the CIO, have squeezed as much as they can out of the easy work.\u00a0 The app support, the testing, the simple coding is running about as cheap as they can get it \u2013 there is little room left for them to maneuver.\u00a0 Hence, the next wave of growth for the Indian providers is to move further up the value chain to win more consultative assignments and service integration work.\u00a0 Several Indian providers are trying to be more like the Western providers, and the smart Western providers have studied the Indians who\u2019ve been eating their lunch, and are working out a game-plan to win back lost business.\u00a0 The cultures are moving closer together, and HfS believes 2011 will see the first mega-merger between a major Indian services provider and one of the Western incumbents.<\/p>\n

2. BPO uptake will creep back throughout 2011, as the recovery stutters and buyers pull the trigger on sourcing initiatives, however, many of the deals for the first-time buyer will be small in scope<\/span><\/span><\/span><\/p>\n

Many businesses were paralyzed by the Recession and have been operating a \u201cwait and see\u201d strategy through 2010 regarding their Business Process Outsourcing (BPO) options.\u00a0 However, a slowing recovery and a growing pressure to meet budgets will drive a steady wave of increased BPO evaluation and contract signing in 2011, especially in Finance and Accounting and Procurement.\u00a0 HfS demand-side research has pinpointed a strong interest from buyers to increase scope in existing BPO contracts, and close to one-in-four businesses in the mid-market ($1bn – $3bn in revs) are expecting to investigate their first steps into F&A BPO.\u00a0 Moreover, many BPO providers are more determined than ever to \u201cpenetrate and radiate\u201d customers with initial small-sized contracts with minimal profit margins, due to the shortage of attractive captive acquisitions and affordable competitive acquisition candidates.<\/p>\n

3. IT Outsourcing will have a banner year as market peaks, however growth will tail-off towards year-end as wage-arbitrage begins to become saturated<\/span><\/span><\/span><\/p>\n

HfS Research shows that 75% of ERP development work is still carried out onshore, and expects the steady growth of application development and maintenance deals to continue apace throughout the year.\u00a0 However, with much of the \u201clower hanging fruit\u201d operational software work from the global 2000 moving to offshore-centric providers at such pace, HfS expects to see the first genuine signs of this market reaching its peak towards the end of the year, as buyers exhaust their arbitrage opportunities.\u00a0 The mid-market will provide a lot of new ITO market growth, however, these deals will be\u00a0 smaller in nature and often less profitable for providers, having smaller scope and often high complexity, that will prove a drain on delivery resources.<\/p>\n

4. Service integration becomes the new fad, replacing innovation as the buzzword of the day<\/span><\/span><\/span><\/p>\n

Too many business have failed to achieve innovation within their outsourcing engagements because they have struggled to bring together common goals and objectives across their sales, general and administrative services.\u00a0 The only way to start achieving new thresholds of productivity is to integrate the management, orchestration and delivery of their sourced operations, where the service integration leadership has the clout, investment and expertise to work with a service integration provider to make this happen.<\/p>\n

5. Service providers will start to break out of vertical silos to help their clients collaborate<\/span><\/span><\/span><\/p>\n

Outsourcing services customers are increasingly eager to learn from peers and share best practices, but this is continuously challenging for them when their service providers are structured in narrow industry silos and struggle to help them collaborate with clients in other industries.\u00a0 Service provider leadership is also looking at ways to help their delivery teams develop better utility models across multiple clients to drive down their margins, and the only way to do this is break from the industry-silo culture.\u00a0 Moreover, they are suffering from the high cost of sales and marketing by having multiple vertical businesses operating independently from each other.<\/p>\n

6. Integrated offerings from service providers with broad capability gain market share. Distinction between BPO and ITO blurs<\/span><\/span><\/span><\/p>\n

With the leading IT services providers all heavily pushing BPO capability, there will be increased blurring of offerings as industrialized process solutions become more popular.\u00a0 Process-only BPO will continue to proliferate across horizontal offerings where there is significant labor arbitrage opportunity, namely finance and accounting, order management and procurement, however within industry-specific process, platform-enabled offerings are the only way providers can develop cost-effective utility models across their clients.<\/p>\n

7. Many CIOs will thrive or fail because of Cloud demand from their business function leaders<\/span><\/span><\/span><\/p>\n

With both Business and IT decision-makers expecting to allocate 30% of their IT budgets to the Cloud over the next five years, it is going to demand new IT and business operating models and radically different sourcing mind-sets from CIOs and business function leaders. \u00a0The ability to access business applications quicker, faster, cheaper and in a virtual business environment are the major drivers – and it’s the business<\/em> side of the house which is getting seriously engaged by the potential value than the IT-side, with two-thirds of business leaders seeing huge appeal in the Cloud value proposition.\u00a0 For many CIOs who fail to deliver this value, the business side will be forced to look at alternative avenues for Cloud enablement.<\/p>\n

8. Successful advisors shift their business models to be “lighter” or more full featured<\/span><\/span><\/span><\/p>\n

The death of the advisory business has long been predicted and failed to materialize. However in 2011 and beyond, buyers will seek a more cost-effective, lighter touch solution from their advisors or seek alternatives. Several trends will contribute to this shift in demand: the significant experience base of enterprise buyers; smaller deals with smaller savings will make expensive consultants hard to justify; industry consolidation is likely, perhaps finally fixing the cost model issues of the advisory world; mid-size buyers looking for advice have many options other than traditional advisory firms. At the high end of the market, however, there is an opportunity to provide a more full-featured offering that goes well beyond transaction facilitation. These clients demand vertical and process expertise, front office integration, cloud strategy, shared services advice, and implementation of all of the above in a single, strategic engagement.<\/p>\n

9. \u00a0Onshore and nearshore alternatives hit the mainstream<\/span><\/span><\/span><\/p>\n

A number of economic and political phenomena will contribute to the growth of onshore and nearshore alternatives, primarily the shrinking of the arbitrage gap fueled by a weak dollar and even weaker Latin American and African currencies. Almost all providers are investing heavily in Latin American capability, and will be highly motivated to drive demand to fill their capacity.<\/p>\n

10. HfS Research will achieve world-domination<\/span><\/span><\/span><\/p>\n

Having rocketed to double-digit employee growth in 2010 (well, reaching a double-digit number of employees), HfS will continue its social-media fuelled surge to change the entire face of the research industry.\u00a0 People want immediate, compelling, data-driven and relevant advice, and have limited patience and ever-reducing attention spans to get it.\u00a0 HfS will be there to deliver it.\u00a0 Its management will become so wealthy they can turn the firm into a not-for-profit and bring Larry King out of retirement to conduct all future HfS blog interviews. \u00a0\u00a0In addition, HfS will fire the White House as a client<\/a> because they won\u2019t give us any tax breaks\u2026.<\/p>\n

If you believe any these predictions to be disturbing, please contact your local predictions support agent at 1-800-BANDWAGON and we will be happy to assist – remember to press #1 for English, otherwise you’ll get a load of incoherent rubbish . \u00a0Alternatively, if you think we’re full of it, feel free to say so right here…<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

Larry King to come out of retirement for HfS? And here we are, like clockwork, \u00a0jumping on the tackiest, lamest…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[46,48,51,53,835,81,86,836],"tags":[303],"ppma_author":[19],"yoast_head":"\nAnd here are... HfS' 2011 Outsourcing Predictions... on demand - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/2011-outsourcing-predictions_120910\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"And here are... 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