WHAT'S UP

With 2005 round the corner, companies are busy with their planning exercise while industry analysts are busy making predictions.

If one looked at some of the key events and trends that shaped the global outsourcing industry in 2004,

The US elections
the GE divestment of GECIS
the emergence, almost simultaneously, of three Indian players with a billion dollars in revenue and
companies, especially in the BPO space, aggressively pursuing inorganic growth strategies

are those that stand out.

We have chosen the above as each has had important implications. With the US being the biggest IT spender and the outsourcing issue being a hotly debated in elections, it was with a sense of relief that the industry greeted the election outcome. The uncertainty that prevailed has paved way for optimism and hope and it is business as usual.

To understand what is the future of the global outsourcing industry, Prayag spoke to Michel Janssen, President, Supplier Solutions, Everest Consulting, an advisory firm in the outsourcing space. Check out Future Gazers to read what Michel had to say.

The GE divestment in GECIS is important, not owing to the magnitude of the transaction, but as it could be a harbinger of things to come. It could be construed as a sign of maturing of the offshore BPO industry, as well as a reconfirmation of the management principle of focus on core competence.In fact, with the offshore BPO industry acquiring scale and robustness both by strengthening of operations and a spate of acquisitions, the justification for captives may no longer be there in many cases.

On the other hand, Prayag's recent research showed that a hybrid partnership model is appropriate for many buyer scenarios. We feature one such successful partnership model, CLI3L, a joint venture between Client Logic and ITC Infotech, in the “ Best and the Rest” section.

While there has been a lot of excitement on the BPO front, the most significant development on the IT services front is undoubtedly the “recognition” of TCS, Wipro and Infosys as global players. It is not often that a global industry has witnessed a phenomenon such as this – where established players are forced to reorient their operating model in order to remain competitive. While India remains unique among offshore destinations with its many “home-grown” players, we believe that other offshoring destinations may evolve with time, albeit in different ways.

China continues to remain the one other country with the scale and potential to offer serious competition to India as an offshoring destination. China does not have a large number of “home grown” players focusing on the global market, but, like with the Indian BPO industry, it could be an ideal destination for large global companies to set up captive units. We re-examine the potential of China as an offshoring destination in the section “In the Eye”.

While on the topic of offshoring becoming mainstream, we have compiled analyst views on trends in offshoring in the section on Bottomline-Topline .

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