Analysis & OutlookGlobal IT Outsourcing Spending 2002-2015, Forecast - Stable growth in near future; AreIndian Outsourcing...
Analysis & Outlookeconomic pressure is delaying the willingness of many commercial organizations to focus onenhancing comp...
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Global IT Outsourcing Spending 2002-2015, Forecast - Stable growth in near future; Are Indian Outsourcing Vendors prepared?

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Indian Outsourcing vendors both large and medium vendors are bracing themselves for the new normal which is the volatile macroeconomic environment and slowing down of the IT spending by companies.

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Global IT Outsourcing Spending 2002-2015, Forecast - Stable growth in near future; Are Indian Outsourcing Vendors prepared?

  1. 1. Analysis & OutlookGlobal IT Outsourcing Spending 2002-2015, Forecast - Stable growth in near future; AreIndian Outsourcing Vendors prepared?Source: Gartner Inc. 2010-2012 – Press releases. 2013-2015 Forecast: IT Services, 2008-2015, 2Q11 Update. June 16, 2011Worldwide spending for IT outsourcing (ITO) services is on pace to reach $251.7 billion in2012, a 2.1 percent increase from 2011 spending of $246.6 billion, according to the latestoutlook by Gartner, Inc. European Sovereign Debt crisis and economic volatility in the UnitedStates are the major reasons why the YoY growth fell to 2% form 8% in 2011. Businesses inEurope and United States are slashing their IT spends and budgets in the past year and most ofthe Indian Outsourcing vendors hinted that clients spending and budgets will either remain flat orwill be cut down in 2013. NASSCOM too lowered its growth forecast for 2012-13 for IT-BPOexports to 11-14 percent from previous fiscal’s target of 16-18 per cent growth. While the globalmacroeconomic scenario remains uncertain in the coming years, the industry will continue toexhibit resilience and adaptability in continually reinventing itself to retain its appeal to clients,NASSCOM said. Indian Outsourcing vendors achieve 90% of revenues from North America andEurope and these dependencies has been a worry for Indian vendors and are looking to focus onother geographic locations for future revenues particularly domestic revenues in India.In North America, Gartner expects that buyers will seek to transition more IT work to annuity-managed service relationships for cost take-out and IT costs. This will keep ITO growingthrough 2016. Enterprises reluctance to hire or make large capital purchases, as well as theirpursuit of asset-light IT strategies, continues to push clients toward consuming externallyprovided services.North America is the largest contributor of revenues to the Indian outsourcingvendors.A challenging economic scenario that worsened in late 2011 continues to affect the governmentpolicies and end-user sentiment in many key European countries, resulting in a forecast forWestern Europe ITO growth decline of 1.9 percent in U.S. dollars during 2012. ReinvigoratedRajesh Prabhakar Analyst Bio @ http://analysiscasestudy.blogspot.com/
  2. 2. Analysis & Outlookeconomic pressure is delaying the willingness of many commercial organizations to focus onenhancing competitiveness rather than cost reduction. In addition, the European public sectorwill continue to see a cautious budget environment throughout 2012. This will force manycentral and local government entities to concentrate on outsourcing initiatives aimed at reducingIT cost through IT efficiencies and rationalization, according to Gartner. Europe is the secondbig contributor of revenues to Indian Outsourcing vendors.Spending on ITO in the Asia/Pacific region will grow 1 percent in U.S. dollars in 2012 andexceed 2.5 percent growth in 2013. With the exception of Japan, Australia, New Zealand, and toa lesser degree, Singapore and Hong Kong, the countries in Asia/Pacific are quite new in termsof outsourcing usage, understanding and sophistication. The growth is being driven by the largeinflow of capital into Asia over the past three to five years, leading to the need among global andregional businesses to scale up their operations, according to Gartner. Asia pacific revenues areslowly increasing for the Indian vendors and all the vendors are targeting domestic deals forrising revenues within India.Indian service providers will look at establishing centers in Chinaand other APAC regions to reduce the dependency on the America region.Indian Outsourcing vendors both large and medium vendors are bracing themselves for the newnormal which is the volatile macroeconomic environment and slowing down of the IT spendingby companies. Even clients are looking beyond mere cost cutting and they want vendors to playan active role and share responsibility for improving the business outcomes and do work whichaffects the profitability of the company. Indian outsourcing vendors are betting on four―powerful‖ technologies—cloud, analytics, big data and mobility—and are believing that thesetechnologies are transforming the industry and providing the vendors an opportunity to increasethe nonlinear revenues, which revenues not related to increase in headcounts and also increasemargins.There have been significant investments made on the development of products andservices that help the clients to deal with technologies like social media, cloud, analytics andmobility (SCAM) to optimize and ensure efficiency in business environment. Acquisitions areanother way in which the Indian outsourcing vendors are looking up to acquire skills and domainexpertise in the above mentioned four technologies and there has been significant number ofthem in the last couple of years.Discussion Points: 1. Will betting on Social media, Analytics, Big data, mobility and Cloud Computing help Indian Outsourcing vendors to overcome the slowdown and increase revenues? 2. Indian Outsourcing vendors are banking on acquisitions for building the capabilities in the above mentioned four technologies. Will this inorganic growth strategy work? 3. How to overcome the talent and skill shortages in the above mentioned technologies and how to build required talent at fast pace?Rajesh Prabhakar Analyst Bio @ http://analysiscasestudy.blogspot.com/

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