Taras Kytsmey, Global Outsourcing Trends 2010 http://liof.org/

1. Global Outsourcing Trends:
Vision for 2010
Taras Kytsmey

2. 2
The trend called “outsourcing” become an industry
in itself with almost unrealistic growth and maturity.

3. 3
2009
 In 2009, cost cutting was one of
the most influential drivers in the
outsourcing market.

4. 4
Global outsourcing market in numbers - 2009
 In the 4th quarter of 2009, the global outsourcing market had
its best performance in six quarters.
 Slow but steady recovery as businesses commit to long-term
strategies to reduce costs and streamline operations.“
 The outsourcing market's total contract value reached $24.7
billion in Q4 2009, up 8 percent year-over-year.
 The total contract value in the IT outsourcing category
increased 54 percent over the prior quarter and 32 percent
over a year ago, reaching $19 billion, the highest quarterly
total in six years.
 For the year, the market produced $56 billion in total contract
value, flat with 2008.
 BPO continued to struggle in the fourth quarter of 2009.
Q42009 remained 33 percent below Q42008. For 2009, the BPO
market's total contract value fell 38 percent to $18.5 billion, its
lowest level since 2001.

5. 5
Global Sourcing Trends in 2010
 Rates of outsourcing pricing declines are expected to slow.
 Sourcing providers are not likely be as accommodating as they were last year.
 Market activity in 2010 should be busier, as many outsourcing projects were
put on hold in 2009.
 There is likely to be a continuation of shorter deals, shorter procurement
processes and an emphasis on "making things work rather than engaging in
complex strategies."
 Do-it-yourself sourcing by internal teams will continue, with less reliance on
consultant/advisory firms while favoring incumbent suppliers.

6. 6
2010 Global Outsourcing Trends
 Transformers 2. "Optimization is the new transformation“ - move in
pragmatic, incremental steps and focus on achieving best in class,
standardized and optimized delivery models .
 If at First You Don't Succeed, Renegotiate. Investment is being made in
ensuring existing suppliers and internal processes are delivering optimum
value
 Multi-Sourcing Malaise. In theory-work with best-in-class IT service
providers and keep costs in check, thanks to the competition. In reality, it's
been difficult at best and disastrous at worst for many customers.
 Captive No More? While certain companies will continue to set up fully-
owned IT delivery centers abroad, look for more captive center divestitures
in the new year and a "marginally lower" number of new captives being set
up

7. 7
2010 Global Outsourcing Trends
 The Urge to Merge. The number of top-tier service providers shrunk this year,
creating both challenges and opportunities for other vendors in 2010.
Examples: HP, EDS, Dell, Perot, ACS and Xerox. Everest predicts that most
consolidation in 2010 will focus on acquisitions of "adjacent and complementary
capabilities across functions, verticals and geographies," as opposed to mergers
solely to increase scale.
 The Mega-Death of Mega-Deals. Increased near-term cost pressures will
drive a continued decline in mega-deals in 2010.
 The Public Interest. All signs point to increased outsourcing in local and state
government. "Budgets are tight, but demands for new technologies are strong.
 The (Slow) Return of the Discretionary Spend. Projects will make a
gradual recovery in 2010, predicts Everest, noting that "the pace of this change
will be dictated entirely by the improvement in the global business
environment."
 Semi-Sourcing - Cloud computing and software-as-a-service-which.
Traditional deals will continue to decrease during the next several years as new
utility and cloud service offerings proliferate.

8. 8
Customer Dissatisfaction Factors
 Gartner Says Customer Satisfaction is Key When Determining Offshore
Outsourcing Options
 Four factors have been identified as the main contributors to the customer
dissatisfaction:
 Client knowledge
 High turnover
 Cultural differences
 Language dialects

9. 9
Outsourcing destinations
 Americas
Argentina
Brazil
Canada
Chile
Costa Rica
Mexico
Panama (new)
 Asia/Pacific
Australia
China
India
Malaysia
New Zealand
Pakistan
The Philippines
Singapore
Thailand
Vietnam
 Europe, the Middle East and Africa
Czech Republic
Egypt (new)
Hungary
Ireland
Israel
Morocco (new)
Poland
Romania
Russia
Slovakia
South Africa
Spain
Ukraine
 No more on the list
Northern Ireland
Sri Lanka
Turkey
Uruguay

10. 10
Central European Outsourcing Market
 According to the recent data provided by Deutsche Bank Research, the
overwhelming majority of German, Swiss and Austrian vendors still outsource
their IT activities to Czech, Slovak Republic, and Hungary preferring them to
more remote Asian destinations.
 However, the impact of EU enlargement on the Central European outsourcing
market is forked. While expanding the market of IT services, fostering both
demand and supply growth, it may lead to labor costs increase, consequently
rising the development costs. And as Natasha Starkell, CEO of Goal Europe has
noted the “higher wages will push offshoring further east”, namely to Ukraine,
Belarus, and Russia.

11. 11
Gartner’s ten criteria for outsourcing destinations
 language,
 government support,
 labor pool,
 infrastructure,
 educational system,
 cost,
 political and economic environment,
 cultural compatibility,
 global and legal maturity,
 data and intellectual property security and privacy

12. 12
Top 10 Technologies and Trends for 2010
Gartner, Inc. defines a strategic technology as one with the potential for significant
impact on the enterprise in the next three years.
1. Cloud computing
2. Advanced analytics
3. Client computing
4. Green IT
5. Reshaping the datacenter
6. Social networking
7. Security – activity monitoring
8. Flash memory
9. Virtualization for availability
10. Mobile applications

13. 13
www.softserveinc.com
Copyright © 2010 SoftServe, Inc.
Contacts
Taras Kytsmey
tkytsmey@softserveinc.com
Tel: +380-32-240-9090
SoftServe, Inc.
52 V. Velykoho St.
Lviv 79053, Ukraine