About a year ago I shared my 2010 forecast for the 5 major outsourcing trends. Writing such a prediction is rather easy and in general nobody will remind you about it. But I think it’s important to review what happened before we raise the glass and light the fireworks, because from that moment we think only about 2011. Honestly, I think the predictions were quite ok and most of them came out. Let’s review them before I will share the 2011 trends with you.
1. The lack of IT resources not really increased
To some extend we can notice economical recovery during the past year. For sure we at Goyello received more requests in the second half of 2010 than in 2009. But the recovery is going slow and might still not be sustainable. People stay reluctant. Anyway, the market is concerned about the lack of qualified IT people in the (near) future.
2. The SME market increasingly choses outsourcing
For me it’s proven the SME market is ready for outsourcing. Increasingly start ups and other SME companies seem no longer to feel the need to organize their own IT-department. They gain competitive advantage based on the idea they have, the content they generate and their marketing and sales. Trying to set up their own IT department could even block them. The time-to-market is more important than ever and besides it’s important to quickly adopt new (mobile) technologies. For most SME companies it’s no longer possible to cover all application platforms themselves any longer.
3. India and China are facing increased competition
India and China are still leading countries when talking about outsourcing. Due to different reasons these countries are no longer the only destinations to be considered by outsourcers. For many of them China is still a too complicated destination. We already shared these market developments with you in our previous post about the Tholons top 100 outsourcing cities.
4. Nearshoring is becoming more popular
The Tholons top 100 mentioned before shows a clear shift towards nearshoring. Recently I even heard about a new trend: “Farmshoring”, which is outsourcing to a rural region within your own country. Especially for companies without outsourcing experience and when you don’t have a too big project nearshoring appears to be a better solution. Besides, nearshoring can be very attractive for realizing prototypes of new applications. The essential interaction and mutual understanding is easier to be found nearby.
5. Outsourcing was in 2010 still cost related
I predicted that other factors but cost would become more important. In fact they also did, but anyhow cost reduction is still in most cases the initial reason to consider outsourcing. Honestly, this is not that strange. The economical recovery is still fragile. Investing in new innovations should be cost efficient. Outsourcing can help in realizing this, meanwhile becoming the new engine of economical recovery. In fact my American friend Stephen Harris already predicted cost would still be very important. He was right!
Bonus 1: I didn’t really notice the need for specialization
I might be wrong but I feel my bonus trend did not really come out. I still think this will become applicable soon.
Bonus 2: The opposition again offshoring dramatically increased
Something I completely didn’t realize was the fact that the lobby against offshoring would be that intense. It started all in the US, but recently even in my home country (The Netherlands) we could notice strong opposition against offshoring. In times of economical downturn I feel this is a natural reaction. We are afraid to loose our job and many people even lost their job. I believe it’s a bit “cheap” to blame offshoring for this. Besides, quality issues are being used to prove offshoring is even not successful. They claim the providers don’t deliver working solutions. As we wrote before it most probably the outsourcer and provider didn’t understand each other. The outsourcer didn’t define his demand and the provider didn’t ask too much.
Outsourcing is there to stay
Despite the recent opposition I believe outsourcing is their to stay. For many companies the advantages are obvious. Of course we need to face the drawbacks and we should try to solve them. That will be one of the major challenges for 2011. Update: Please have a look at our 2011 predictions by clicking here. We would love to get your opinion about them as well.