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Technology Partners International Inc. (ATPI), a TX-based consulting firm, estimated that close to $100 billion worth of large outsourcing contracts are due for renewal by 2008.
According to ATPI, US companies are about to spread mega-deals from large single contracts over multiple, smaller providers, a blow to all large outsourcing firms.
While the IT outsourcing / BPO market will continue to grow at an average 8% in 2008, according to the Gartner Group, the year might mark the end of the current “one-size-fits-all” outsourcing model.
Far too often, leading providers have applied the brute force approach to outsourcing: “throwing people at a problem”, especially by tapping into their cheaper pool of talents (India, China, etc.). This model has reached its limits and has finally started to fade away.
New customer/relationship models are emerging, centered on flexibility. Says Julie Giera from Forrester Research, “customers want an outsourcing offering for IT and Business Process Outsourcing that evolves, or “flexes”, as their needs change over time.”
Market leaders might be slow to embrace this new model; an opportunity of a lifetime for smaller size providers to make it to the next step.
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