Outsourcing relationships and destinations are changing, and vendor management is as important as ever, according to new analyst reports.Russian outsourcing provider Luxoft, said outsourcing vendor and client relationships are evolving into partnerships with clients now seeking increased value from vendors. Vendors are expected to deliver innovation and expertise to client’s business processes, Luxoft said in a report predicting outsourcing trends for 2008.
The National Outsourcing Association (NOA), in its annual survey of upcoming outsourcing trends, said Knowledge Process Outsourcing (KPO), which it defines as the “outsourcing of high value-add functions,” is likely to increase as trust in business process outsourcing grows. The new trust involved in the outsourcing partnerships will mean more data is shared and security measures become even more essential to deploy, Luxoft said. Luxoft also predicts the growth in popularity of outsourcing for functional and system integration, and for new outsourcing services to be put on offer in the market that test all areas of system performance.
Also, because of increasing competition for skills in some outsourcing destinations, there will be more evidence of vendors tapping into the resources of other countries. “This could, for example, bring Russia and India or China together in new and interesting ways,” Luxoft said. Nearshore destinations will continue in their attraction as clients want “the combined benefits of proximity and familiarity as well as the manpower boost of outsourced resources,” added the Russian firm. In particular Eastern Europe and Canada are noted destinations. The Russian outsourcing industry escalated to over $1bn from 2006 to 2007, Luxoft said.
The NOA said the global delivery model is likely to move beyond India, citing the often said explanations of climbing attrition rates and rising Indian salaries. But news of Infosys Technologies registering growth of 25 per cent during the third quarter of this fiscal, indicates Indian providers are challenging analyst’s expectations.
