Year 2008 saw the economy come crashing down and businesses squandering for relief. And if industry experts are to be believed, year 2009 is going to be no better.
Year 2008 saw the economy come crashing down and businesses squandering for relief. And if industry experts are to be believed,
year 2009 is going to be no better. The only solace is that companies and organizations understand the situation and are taking adequate measures to survive through the calamity.
One of the prime agendas of businesses across the world is to employ the practices of offshore outsourcing. Because of the uncertain situations, offshore outsourcing can be an efficient methodology to cut costs and save money, initiate new business ventures and improve the quality of business processes. Here are some of the potential outsourcing trends you may see this year.
Reviewed Outsourcing Deals
At present, outsourcing deals fail to realize their full efficiency because they are more based on people and less on the actual demand. Companies that hire outsourcing service providers negotiate a specific rate and determine a fixed duration for the contract. However, the cost figure is always based on the number of people doing the job and the time they spend on the same.
The deal structure of outsourcing contracts have been traditionally based on the employee rental model, wherein clients pay for the number of people at the task irrespective of the relevancy of work done. Outsourcing companies have evolved with time but the basic deal structure remains the same.
Outsourcing contracts that rely on people-based model seldom offer any incentives to improve the productivity or efficiency. On the other hand, demand based outsourcing contracts offer tremendous potential for advancements.
Rationalization of Portfolios
One of the most popular trends in the application outsourcing market has been that of portfolio rationalization. Clients review the portfolios of their outsourcing service providers and choose the best out of the lot. In a bid to get the best of services, they may even mix and match a combination of companies, countries and models. This is an extremely critical procedure because one has to streamline all the components of the combination in order to get effective deliverables.
However, it is important to understand that there are few differentiators between the various service providers and hence was the concept of portfolio rationalization incepted. There is a plethora of company and country choices available and there is a whole lot of readily accessible information on the Internet. The choice of the country and the service provider depends on the size of the company and the outsourcing deal. Generally, a multi-vendor approach works best.
Cost Cutting
Outsourcing clients will make all possible effort to cut costs in their investment area. This is a natural consequence of the grim economic climate and subsequent credit crunch. The clients may look to offshore more work to service providers in a bid to cut costs. However, they will seek the best services for the lease possible costs. This could lead to severe competition among service providers to secure outsourcing contracts. Moreover, emphasis would be on quality of deliverables, speedy delivery and additional benefits at the lowest possible investments.
Also, with the value of Rupee depreciating against the value of dollar, the cost escalation is turning to India. This would add on to the fierce competitiveness of the industry.
