While industry pundits don’t tire from discussing the outsourcing industry’s expanding/fading future, there are some who assure that outsourcing is not slowing down, but going through a make over. The recently released Q207 Pulse Survey by EquaTerra substantiates this reshaping. It finds that the outsourcing market is growing in non-traditional areas. Customers are more positive about their outsourcing experiences than in the past quarters.
Thirty-seven percent of EquaTerra advisors cited that demand was up globally in 2Q07, and 50 percent of EquaTerra advisors cited that demand was up in EMEA in 2Q07.
In this context, there is a reason for smaller players to cheer, as they compete headlong, for some deals, with the “Big Six” (EDS, Accenture, CSC, IBM, HP and ACS). “We find that business players such as Genpact, Hexaware BPO, Caliber Point, are doing better than the big players of this industry,” says Stan Lepeak, Managing Director, Research, EquaTerra.
The study also reveals that the smaller “Under the Radar Screen” outsourcing deals — those deals not made public either because of their size or of involvement of many providers — are not so small anymore. These deals may range anywhere between $1 (even lesser) and $10 million.
Moreover, while a sinking U.S. dollar and rising Indian rupee is financially hitting India-based service providers, its impact has been varied across firms. “All leading Indian providers continue to grow revenue and profits impressively,” reveals the study. “Infosys, TCS and Wipro’s quarterly financial results were all negatively impacted, however, by a combination of exchange rate and home-market wage inflation pressures.”
What was Hot in Q2 ’07
Outsourcing deals in the areas of non-traditional services such as legal processes, document services, market research, clinical trials, data analytics, engineering, and real estate, are increasingly taking up a larger part of the outsourcing market. A $950 million litigation support services outsourcing deal was inked between U.S. Department of Justice and a Lockheed Martin Consortium.
“It is not that such services are new to this industry, but the new thing is that the size of such deals has grown tremendously in the last quarter,” says Lepeak.
