IT Services Outsourcing Industry witnessed a rather dull year in 2009 majorly due to the slowdown of the global economy which led to organizations freezing their IT budgets. Banking and Manufacturing, which are the biggest customers for the IT Services sector struggled big time to stand on their feet and evidently the spend on IT Infrastructure/Services was curtailed.
However, the services sector is seeing a revival of sorts with the likes of TCS, Wipro etc striking multi-million dollar deals in the early part of 2010. With the economy slowly recovering and companies looking to expand their operations, 2010 already looks to be a promising year for Indian IT Outsourcing Industry.
Tholons, a advisory firm specializing in Global Outsourcing published an insightful report on the Outsourcing Trends For 2010 which is pretty much in sync with the current market dynamics.Here are a few salient points from the report
IT Outsourcing Trends For 2010
- Increasing Interest In Nearshoring Operations
IT giants have been increasingly setting up new delivery centers in various parts of the globe to help serve their customers better and also to compete head on with local IT players. European and South American centers have been constantly growing as top outsourcing destinations and 2010 would see them gain more prominence. Firms like TCS have already established a strong presence especially in the South Americas and continue to expand in regions like Brazil etc.
This is definitely going to help firms negate the timezone issues in operating from India and also increase trust with the customers skeptical of sharing their data out to India
- The Year of Cloud Computing (SaaS)
Isn’t Cloud Computing the Hot Cake in the technology sector for a good 2-3 years now. With increasing awareness of the advantages of cloud computing among the customers, Service providers are increasing looking at developing capabilities in the Cloud Computing department. This is also driven by the fact that the leading enterprise software vendors like Oracle, SAP are expanding their product portfolios with SaaS based applications especially for the SME sector.
Personally, I think Indian IT Service companies still have a long way to go before they establish their dominance in Cloud Computing
- Increased Customer Participation and Focus on Gaining Maximum Value
Outsourcing is more or less considered transferring all the dirty work to a specialized player wherein the customer pretty much shakes his hands off from the outsourced activity and the provider ensures that the work gets done. However, with tightening IT budgets customers are more likely to take increased interest in working with their outsourcing providers in ensuring that they get maximum value from their investments
- Increased IT Spending
More than the private sector, it is the government backed reforms which are expected to lead to significant increase in the spending for IT investments. One definitive indication of the same can be seen from the recent health reform policies in the US which has created a huge market in the Health Information Technology Sector
- Supplier Locations Turning Demand Locations
This is the most interesting trend of them all. Asia-Pacific, touted as the leading provider of IT Outsourcing services is also expected to witness an increase in IT spending. Countries like China, India are seeing better than expected industrial growth and as a result, need for investment in IT is evident. Moreover, Indian marketplace has also seen an increase in IT spend from the government in the form of UID project etc. which signifies the increasing domestic demand for IT services
The complete report is available on request at Tholons website
The year so far has been rather good for the Outsourcing industry with an increase in the number of deals as well the gradual return of big ticket projects.
What do to you think lies in store for the IT Outsourcing Industry. Do you think there are many more emerging trends which will drive the outsourcing market?
Thanks for sharing such kind of useful information specially for hose who belongs to It-sector.Now a days Cloud computing and offshoring became the main factors in the emerging trends of IT outsourcing market .
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Agree completely, e-governance is going to be big. Lots of reforms globally as well at a domestic level all having spend on IT as a critical parameter. TCS is going all out on e-governance and has i think set up a new vertical for same. The domestic market thanks to good industrial growth is now ripe for the picking.
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I believe e-governance can take away a lot of focus this year with the IT biggies like IBM and TCS looking at it in a major way.
Also, since the economy is upbeat, I foresee a lot of investments in the manufacturing sectors, focusing on business intel. Actually gartner has also made this prediction bout India and China in a report (I forget which one)
Yes, I agree with you, that these will be the major trends… its a really nice article btw :)
Arpan, thanks for sharing your thoughts. Cloud is indeed big and it is evident from the increase in subscription based deals that the enterprise vendors are seeing. As far as India is considered, i agree that there is quite sometime before they can use the ‘Cloud Computing’ wave as a driver.
As for the title, i never mentioned that these are the only bigger trends. These are a few emerging trends and there will definitely be many more. I choose to share the ones i could co-relate with what has transpired already in the year
What do you think are other major drivers?
The year of Cloud Computing? It will take quite some changes in the social architecture before that becomes possible.
I agree with the rest…but I don’t agree with the title. these may be few trends, but I would not consider them as the bigger drivers..