American firms continue their rapid expansion of service and product outsourcing. Companies signed major new contracts for information outsourcing alone in 1994 worth $11 billion; in 1995, $20 billion; and in 1996, $33 billion, and all signs point to vigorous growth ahead.
Mention multi-vendor outsourcing relationships these days, and the J.P. Morgan/Pinnacle alliance bubbles up in every conversation. That alliance, said Alan Gonchar, president, COMPASS America, Inc., has become the model for a growing movement toward teaming.
While the glamorous multi-vendor deals are the ones garnering most of the attention in outsourcing, the real growth in that area will come in the less sophisticated arrangements. That’s the opinion of Bill Martorelli, an industry analyst formerly with Giga Information Group.
The practice of outsourcing business processes is gaining favor with top executives at corporations around the world, leaving them satisfied with the service they’re receiving, free to focus on core activities, and looking carefully for new areas to outsource.
Tomorrow’s clients are looking for ways to gain competitive advantage, to increase efficiency, to transform their workforce, and to reach new levels of performance.
The move toward selective outsourcing has created a marketplace where fewer big outsourcing deals will be transacted and more niche vendors will team together to deliver the services they do best to specific customers.
Outsourcing is exploding, with new vendors scurrying onto an increasingly competitive landscape, and the ‘hot stuff’ offerings of yesterday are becoming standardized fare today.
The proliferation of outsourcing is just phenomenal across types of activities, across industries and at every level of the organization.
Outsourcing as a management tool will continue to be actively employed. Today, if a manager doesn’t look at all the ways of obtaining resources to do the best job for the company, he’s not doing his job right.
Over the past three years, strategic outsourcing has become an increasingly familiar practice — and by all accounts, it will be even more prevalent in the near future. The worldwide market for outsourcing services is expected to double in the next five years — and, according to a recent survey, a majority of executives will consider outsourcing nearly every non-core business process by the year 2010.
There’s a high rate of dissatisfaction among customers with IT outsourcing agreements, according to recent surveys by Deloitte & Touche, Coopers & Lybrand, and others. However, that dissatisfaction appears to signal the industry’s growing pains rather than its demise. The outsourcing market has continued to grow, enjoying a 15 percent to 20 percent annual growth rate for several years.
Tall oaks from little acorns grow. That old Latin saying applies to the staggering growth taking place in international Information Technology (IT) outsourcing. The growth trends predicted over the next few years in the US and around the world are rooted in a strong and established corporate practice of outsourcing. As this growth continues, COMPASS sees a worldwide need for more effective, corporate outsourcing strategies.
Outsourcers that have the infrastructure and more importantly the expertise within a given process will be able to capitalize on that opportunity.
We continue to see the refinement of the evolving nature of the deals at the industry’s high end, which reveal a high degree of creativity and innovation in some cases driven in large part by IT executives.
There are five lines of business that will define EDS today and going forward into the next five years: we will continue to play a major role in the systems technology management arena that’s outsourcing, systems integration, development and maintenance, we’re also building a robust business process management business that’s supply source, teleservices, data mining and warehousing, imaging, environmental and safety, and logistics, consulting, cosourcing is a distinct line of business, and electronic markets card processing, electronic funds transfer, EDI, and internet/ intranet in some ways actually being a direct participant as opposed to a supplier.
Outsourcing in the traditional sense a way for companies to save money is changing. The clients I talk with now view outsourcing, or some form of it, as a viable option to not only saving money, but to actually help them improve their competitiveness.
Outsourcing Buzz Blog Outsourcing Alert