New York February 22, 2007 At the start of 2007, we have once again surveyed the lawyers in Morrison & Foerster's Global Sourcing Group in key markets in the United States, Europe and Asia. This update collates their views on the state of the global outsourcing market and makes predictions about what to expect in 2007. Our views are based not only on what we have seen in the many sourcing projects with which we have been involved over the past 12 months, but also on the views of many of our clients, service providers and outsourcing consultant colleagues.
Twelve months ago, we predicted the further expansion of business process outsourcing (BPO), the growing maturity of the offshore market and the growth of multi-sourcing at the expense of single one-off "mega-deals". Each of those trends has developed over the course of 2006 and, in our observation, 2007 will continue these themes but at an accelerated pace. For example, not only has the mega-deal suffered but most deals are now both shorter in duration and smaller in value than two years ago. Clients are committed to outsourcing but are less prepared than in the recent past to be locked into long-term deals. Flexibility has become the new outsourcing mantra.
Our predictions for the sourcing market in 2007 are:
- A continued trend towards smaller, shorter deals as clients focus on individual processes instead of large, complex institutional transactions;
- Increased reliance on global service delivery models;
- Data privacy and data security issues will become ever more important to outsourcing customers;
- Increased offshoring to Asia as clients become more confident about doing business in China;
- The outcome of the 2006 U.S. midterm elections may lead to a revival of anti-outsourcing sentiment in the United States; and,
- Large Japanese companies will begin to adopt recognizable elements of IT outsourcing and BPO models into their traditional contract partnering modes of operation.
BPO Some Up, Some Down
Offshoring Becomes Global Service Delivery
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