February 14, 2012: Outsourcing is undergoing changes along with the change in the market and the uncertainty in the economies across the globe.
Following are the trends that will be observed in the outsourcing industry during 2012.
- The concern over cloud will rise
Even though more companies will go for adopting cloud services, there will be issues with data protection laws in the offshore locations, absence of protective measures in the contracts and reluctance by large organizations to adopt cloud services.
- There will be rise in the number of mergers
The Information Technology service providers will find it tough to predict the market and the clients might postpone their decision to outsource. This will lead to more service providers going for mergers. It is said that the industry will witness 2 to 3 mega mergers in the current year. The merger activity will be visible among the tier 2 and 3 companies too.
- More countries to come forward
Not so famous countries in the area of outsourcing such as Brazil, Sri Lanka and Vietnam will be considered by companies as favourable destination to outsource their business functions. The profile of such countries has been improving along with the rise in the number of talents. An ideal example of such type of country is Brazil which is trying to become a leading player in Latin America. The companies are not worried about data security in the region as most of the countries including Brazil have introduced laws and regulations to make data secure.
- Smaller deals will increase
Smaller deals have become popular among customers as they have options to move out of the deal if necessary. Risk aversion is one of the main agenda of customers and so they prefer contracts spanning across short durations. So the service providers are forced to offer such services. The contracts often contains clause that enables the customer to bail out in case of poor market conditions.
- Data protection will be a major concern
Within the next couple of years, the countries in the Europe will introduce more stringent data protection laws that will penalize companies for data breaches. So the service providers will have to adopt higher standards to comply with the data protection laws.
- Legal Process Outsourcing to gain importance
An area in the outsourcing industry that will have immense potential in the future is the Legal Process Outsourcing. Outsourcing will help companies in the west to reduce cost. More service providers will emerge in the LPO domain.