As a top Russian outsourcer, NTR likes to track the predictions of outsourcing trends for next year. Here is what the pundits are saying about 2008.

1. According to Phil Fersht, recognized sourcing industry advisor, analyst and practitioner, “offshoring panic will continue but force providers to innovate.”

Outsourcing providers are urged to concentrate on building consistent, ongoing efficiencies, dynamic work environments for their staff and expand delivery centers into other low-cost global locales, such as Latin America, Philippines and South East Asia.

India, with its rising wages and the diminishing savings American companies get from outsourcing, is one striking example. Indian outsourcing firms, such as Infosys, are opening offices all over the world to stay competitive—Mexico, the Czech Republic, Thailand, China, Poland and the Philippines—basically outsourcing outsourcing. What’s more, India’s opening offices in the US! Mumbai-based Tata makes use of “insourcing” and has opened their call center in Ohio and hired native Americans as employees.

Two other trends worth mentioning are the overall consolidation of outsourcing providers (with mergers and acquisition in the pipeline) and globalization of the market as more regions seek to cash in on the offshoring boom.

2. Technology platforms within Business Process Outsourcing (BPO) engagements are expected to become more standardized.

SAP, a market and technology leader in business software solutions, already supplies BPO for the leading ERP vendors, as well as solutions and services for meeting strategic BPO goals for other industries.

3. The rising competition among IT outsourcing vendors is predicted by Mr. Fersht to drive increases in Remote Infrastructure Management (RIM), while other outsourcing engagements—payroll, benefits administration and HR-IT—grow at a slower pace.

Finance & Accounting Outsourcing (FAO) is expected to experience a slowdown and then a growth spurt as the leading providers assimilate recent business deals and take advantage of better technology, more standardized processes and incorporate new locations—namely Latin America.

Especially interesting is the rise in small-scale outsourcing. According to a report by research company Evalueserve, the revenue of “person-to-person” offshoring between April 2006 and March 2007 was in excess of $250 million; it predicts that p-to-p offshoring market will rise to more than $2 billion by 2015.

Examples of p-to-p outsourcing services include online tutoring, such as TutorVista.com, writing and translation services, design and development of personal websites, or basically anything an individual requires. On DoMyStuff.com people post a range of tasks—from house cleaning to arranging dinner with a celebrity—while others bid to do them—a form of on-shore outsourcing.

4. And last but not least, the predicted economic slowdown may spark off more outsourcing contracts with cost cutting in mind. As Mr. Fersht pointed out, “History has so far proven that outsourcing has been aggressively driven by companies in financial distress during economic downturns”. Whether this actually happens or not, only time will tell…

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