Whither Outsourcing?

In the past couple of days, I've read conflicting things about the state of the Scarlet "O" -- whether it's a badge of honor that's on the rise, or whether it's a small tattoo that's slowly fading away. Business Standard, an Indian publication, presents a conflicting view in this piece. The article begins by citing a recent study by DiamondCluster, noting the consultancies findings that "the IT outsourcing boom is over [and] onshore providers are facing new pressures and companies are outsourcing more strategically and selectively." But later in the piece, the authors suggest these findings are in conflict with many of the views and research from McKinsey, Forrester, and a range of Indian providers. On the other side of the world, The New York Times tackled the subject as well. In part, the piece argues that outsourcing is no longer a political chip, as basic economics and the strength of the US service economy and domestic innovation have compensated for the movement of any positions offshore. And perhaps the most important bellwether sign is that outsourcing is here to stay is that it is not playing a role in this years political elections.

Drilling down on our corner of the market, when it comes to Spend Management BPO or managed procurement services, it's been a fairly quiet couple of months. There's not been much activity or announcements of new deals as far as I can tell. And aside from Accenture's recent targeted acquisitions, there's not been much consolidation activity either. At this point, I'd argue that my earlier thoughts on the subject still hold true. But the big question is whether procurement BPO will ever get a prime time showing. The way things are going -- despite the great business case for it -- makes it seem unlikely. Perhaps, in the end, we'll need to be comfortable with a supporting slot.

Jason Busch

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