Smaller US businesses turn big for BPO firms

EVEN as large outsourcers cut down their information technology budgets, smaller companies in the US seeking to save costs by adopting offshore outsourcing, will help outsourcing vendors cope with the slowdown, according to a recent study by Tholons. “We expect to see a revival in outsourcing, and we are already seeing a rise in outsourcing-related activity for engagements that will come to fruition in 9-12 months,” Tholons said in its study titled ‘Top ten trends in services globalisation 2009.’ The current economic downturn and financial sector consolidation will lead to increased outsourcing from companies in the sectors of healthcare, education, retail, telecom and legal services, the study added. “Service buyers will need to re-assess their outsourcing strategies and implement a better mix of multisourcing combining nearshore and offshore models, while service providers will look to tap growing domestic markets (such as China, India, Argentina, Brazil and even the US) as a means to hedge against volatility of existing offshore contracts,” said Avinash Vashistha, chief executive of Tholons. Customers with reduced IT budgets, will be forced to be more selective, and will demand far more stringent service-level agreements (SLAs), greater contractual flexibility and business-outcome-based payment schemes. “We will see clients negotiating hard with suppliers to reduce costs while suppliers will try and protect rates but offer more value-added services,” it said.